Why Couldn’t Tesla Inc (NASDAQ:TSLA) Sell Cars in India?

Tesla Model S

Tesla Inc (NASDAQ:TSLA) was hoping to enter the Indian car market this summer. But the automaker may delay the launch due to some local regulations.

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To sell cars in India, Tesla must have a local manufacturing facility in the country. Under the foreign direct investment (FDI) in India, any foreign firm could sell products including cars in the country if it has local manufacturing plants.

This mean, Tesla cannot export made in-the-U.S cars for selling in India.

Last week, Tesla CEO Elon Musk said on Twitter that his company could not sell cars in India because it would need 30% of parts to be locally sourced.

Responding a question on Twitter, Musk said: “I was told that 30% of parts must be locally sourced and the supply doesn’t yet exist in India to support that.”

However, a statement from the Indian commerce and industry ministry suggests that Tesla needs to build a manufacturing plant in India to sell the vehicles in the country. There aren’t any sourcing requirements on parts by manufacturers in India, according to ministry.

In a bid to curb carbon emissions, India wants all the nation’s car fleet to be 100% electric by 2030.

Indian officials have been trying to convince Tesla Inc (NASDAQ:TSLA) to establish a manufacturing facility in the country, according to a report from Electrek. The publication reported that Tesla’s executives visited India and met with India’s Transport and Highways Minister Nitin Gadkari to “talk about introducing and increasing the adoption of pollution-free road transport with a focus on commercial and public vehicles i.e trucks, buses and two-wheelers.”

We don’t know about Musk’s plans for an India manufacturing facility at this time. But we believe that India is a big market and Tesla could soon announce how and when it plans to break into the country.

Meanwhile, shares of Tesla Inc (NASDAQ:TSLA) were trading up 1.17% in the morning trading session on Wednesday. The stock is up around 44% so far this year. During the last 12 months, the automaker’s share price has surged around 41%.

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