India luring Tesla with incentives to deliver world's cheapest manufacturing costs, official says

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India is rolling out a red carpet of incentives to convince Tesla to open up a factory in the country.

The automaker has been exploring the idea recently. CEO Elon Musk said last October that it would start selling cars in India this year "for sure" and confirmed in January that it was in talks to open several showrooms "as promised."

Indian transport minister Nitin Gadkari has now told Reuters that the government is offering Tesla an incentive package that will ensure its manufacturing costs in India will be the lowest in the world and less than those at its Shanghai, China, factory.

Gadkari would like to see Tesla establish a full manufacturing process in the country, instead of just an assembly operation that uses imported parts.

“Rather than assembling (the cars) in India they should make the entire product in the country by hiring local vendors. Then we can give higher concessions,” Gadkari said.

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India is the world's fifth largest car market, but only 5,000 of the 2.4 million cars sold last year were electric. The government is looking to change that, however, by subsidizing a shift to zero-emissions vehicles.

“I think it’s a win-win situation for Tesla,” Gadkari said, adding he also wanted to engage with Tesla about building an ultra high-speed hyperloop between Delhi and Mumbai.

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