If corona virus has to leave behind its trail, for India it has to be its wreaked economy. In the first quarter of the 2020, India’s economy contracted by an unprecedented amount of 23%. During just arduous times, certain sectors proved to be pivotal in keeping the economy going. One of such sectors was the car manufacturing sector, though it faced unprecedent contraction for some time but never the less, proved quite resilient. As the healthy spurt in car sales continue to boom in 2021, electric cars offer an environmentally friendly prospects for India, which if fructified can prove quite lucrative.
Elon Musk, south African born, founder of SpaceX and CEO of Tesla, has a net worth of $200 billion. His company is less than 20 years old and usually its production remains around half a million cars a year. But still this comparative low production doesn’t deter Tesla to capture the car market. In terms of electronic vehicle capabilities, Tesla is way ahead of other car makers, so much so that its worth is more than 10 autocar makers combined. What gives Tesla this power of capturing market? Its infallible advanced batteries and electric motors used in its cars. And what do you obtain from these experienced, cost efficient and electric car makers? The answer is rather simple, Consumer utility coupled with economical cost.
Though the EV market trend was only encountered in the wealthy countries, but in recent times, this trend has made its way in India as well. TATA Motors seems to be the only viable electric automobile producer that is doing well in India. The Tesla’s entry into the Indian EV market provides a clear opportunity to Musk as India’s electronic market is set to grow nearly $206 billion in the coming decade. India’s 2030 visionary EV ambition signals towards electrification of 70% of all commercial cars. This uptick in sustainable consumption and EV sales in India could not have come at a better time for Tesla. Call it cautious marketing strategy or the game of luck, Tesla has got it right! It was revealed last week that the American carmaker would move into India. On January 8, Tesla got registered as a private subsidiary of an unarmed international company, setting its office in Bengaluru. Elon Musk announced its arrival with a series of 2-word tweet “as promised”. He also stated that the beginning of the car sales might be costly for Indians, as the base model is priced at Rs. 60 lakhs, he promises to reduce the prices by starting the production in India. This presents a great advantage for the Indian job market and is a step closer to realizing MR. Modi’s dream of an ‘ATMANIRBHAR BHARAT’.
However, Tesla’s late entry into the market provides certain pointers for Indian administration for its policy of ‘ease of doing business’. Musk in 2018 through a series of posts stated his discontent for tedious Indian regulation ‘some challenging government policies’ and later tweeted, ‘would love to be in India. some challenging government regulations, unfortunately’. Despite prime minister Narendra Modi’s assertion that “more than 1400 archaic laws that were obstacle to doing business have been abolished”, India is not the most favorable choice for top carmakers and this needs to be rectified. Musk’s Tesla has been in talks with government from the last year requesting temporary waiver of import penalties and other restrictions.
India’s archaic laws of import duties are changing to facilitate the shift to environmentally friendly car. But India’s inadequate charging and battery manufacturing structure requires an investment of $180 billion. Currently India has just 1800 charging points. India needs foreign joint investment due to credit crunch in the economy. To provide an amicable and viable environment for investment in India is the need of the hour. Pandemic provided India with a spectacular opportunity to attract foreign investing firms to move into India. But India didn’t quite fructify on these prospects, as it turned out that corporation taxes in India were high and thus many manufacturing companies deflected to Vietnam. A considerable chance that India lost upon.
India, at this hour, needs to revise its foreign investment policies as its ‘National Electronic Mobility Plan’ has the potential to contribute 25% by the year 2022. Earlier this month, the Palo Alto, California based company moved a step closer to establish its factory in china. So, will India set forth some measures to rectify its policies to realize its dream or are we to falter on yet another ambitious plan of future? We are yet to see.