Tesla wants some concessions: Nitin Gadkari

The minister of road transport and highways in an exclusive and wide-ranging interview on Forbes India Pathbreakers Season 2 talks about India's ambitious EV rollout plan to boost growth

By Neha Bothra Forbes India Staff

Published: Aug 4, 2023 11:25:29 AM IST

Updated: Mar 29, 2024 05:51:24 PM IST

Full Bio

(File)Indian Transport Minister Nitin Gadkari, poses to the media at the Zojila tunnel that connects Srinagar to the union territory of Ladakh, bordering China as he inspects the work at Baltal northeast of Srinagar, India. Photo: Tauseef Mustafa/AFP

Nitin Gadkari, minister of road transport and highways, has put India in the fast lane. In the last nine years, Gadkari has transformed the country’s highway network. Efficient allocation of capital and time-bound execution of road projects in a challenging environment are key factors that contributed to the rapid change in India’s transport infrastructure with the construction of new expressways, highways, tunnels, and ports. His focus on renewables and alternative fuels opened up new opportunities and ushered in a green revolution.

Gadkari set his sights high to accelerate India’s growth momentum. Not just infrastructure, he wants the manufacturing sector to drive growth too, and he is betting big on the automobile industry for this. In line with this vision, there is a big thrust on the rollout and adoption of electric vehicles in the country.

“EVs are very popular. The present turnover of the automotive industry is Rs 7.5 lakh crore. This is the industry that contributes the maximum GST to state and central governments and has generated 4.5 crore jobs. The mission of my ministry is making this a Rs 15 lakh crore industry,” he says in an exclusive interview on Forbes India Pathbreakers Season 2. “Previously we were the fourth largest auto market in the world. But two months ago, we surpassed Japan to become the third largest. I am confident that in five years we will become number one. All types of reputed brands—trucks, buses, tractors, cars, scooters—will be here. We will export all types of auto vehicles to the world. That is the vision of my ministry and our dream is to make India Atmanirbhar Bharat. The auto industry will be a big contributor as we make India a $5 trillion economy.”

As part of its strategy to make India a global auto manufacturing hub, the government has been in talks with foreign players to set up shop in the country to boost the local economy. Leading electric carmaker Tesla has been exploring opportunities to tap the Indian market and has been evaluating options with the government for over two years without any material headway. In June, however, Elon Musk met Prime Minister Narendra Modi in New York to break the deadlock. Recently, the company’s management met government officials in India to negotiate terms to produce a new low-cost electric car priced at around $24,000.

Also read: The Tata Group has built an electric vehicle universe. Can it help its global ambitions?

“They are welcome at any point. They have been in talks. They have a big plant in China where the capacity is very high. They want some concessions but they have to manufacture in India. But now I am expecting that they will come to India. Tesla will get a lot of business in India,” Gadkari adds.

Clearly, India is the fastest growing economy in the world and is increasingly being seen as an attractive investment destination to offset China’s slowing economy and rising geopolitical risks.

“It is always a red carpet for investors. India has raw materials, manpower, low-cost talent, and the environment is very friendly. So it is a great opportunity for investors. People are coming—

semiconductors, defence, aviation—so many people are interested,” Gadkari says. “We need to increase exports and reduce imports. We need to adopt R&D and futuristic technology—from our own country or abroad—to develop good products and technology of international standards. I feel we have got capability and the situation is very favourable. The government is very friendly for development. With all of this we are ultimately going to create history.”

Reports indicate Tesla has rented an office space in Pune from October 1 as it finalises its India foray and irons out points of differences with the government. According to media reports, Musk has been trying to seek tax exemptions and an arrangement for lower import duties on electric cars as he wanted to import Tesla cars from the Berlin Gigafactory and sell these in India to test the readiness of the market. However, the government has been very clear that Tesla is welcome to India only if it agrees to manufacture its electric cars in India.

Also listen: Tesla's China hurdle in India

Also, a recent report says the government has recommended Tesla follow the strategy of Apple in India by partnering with local companies that can work with Chinese suppliers to meet Tesla’s reliance on imports from China for critical components such as battery cells, for example, as India is wary of permitting wholly-owned Chinese auto component companies to produce in India.

In July, as per industry data, Tesla’s cars manufactured in China declined 31 percent month-on-month to 64,285. India is an important market for Tesla, undoubtedly, as it faces higher competition from rivals such as China’s BYD in other emerging markets like Thailand, for instance. The Chinese automaker BYD’s entry into India is fraught with challenges as it struggles to get the green light from the government for its proposed $1 billion investment.

(Coming soon—Forbes India Pathbreakers Season 2: Watch this space for interview snippets of the first episode featuring Nitin Gadkari, minister of road transport and highways)