The country is drafting a new strategy to entice electric vehicle (EV) producers and promote higher investment in the sector, according to Indian Commerce Minister Piyush Goyal, who made the announcement on Wednesday.

This news comes at the same time as current negotiations over the potential construction of a manufacturing facility in India between the Narendra Modi-led Indian government and the American-based electric vehicle manufacturer Tesla Inc (NASDAQ:TSLA).

According to sources with intimate knowledge of the situation, Reuters reported last month that India was developing an EV strategy that would lower import duties for automakers that committed to some local manufacture.

Senior executives from Tesla who were interested in constructing a factory in India met with Goyal in August.

He emphasised that the government wanted to boost domestic manufacturing and quickly entice more investors, saying, "We will come out with a policy."

"As we get large-scale production, we will start enjoying the fruits of economies of scale of new technologies," Goyal continued. At this time, the minister didn't go into depth regarding prospective incentives.

Tesla intends to produce an affordable electric car for $24,000, which would be around 25% less expensive than the company's current entry-level model. This more affordable EV will be sold both in India and abroad.

In terms of parts, Piyush Goyal revealed on Tuesday that Tesla has set its sights on acquiring parts from India valued at between $1.7 billion to $1.9 billion this year, a significant increase from the $1 billion in parts it bought the year before.

India's EV environment

Elon Musk had previously acknowledged that certain government regulations prevented him from entering India, despite his desire to do so. That's because India has made it mandatory that any product marketed in India must contain a specific proportion of local components. In order to boost domestic demand and lessen reliance on imports from abroad, this was done. However, the infrastructure required to produce the parts required by Tesla cannot be found in India

EV

 Until the problem is rectified, Tesla will find it difficult to establish a base here.

Since Tesla is an electric vehicle, there is another factor in this situation. To ensure that a Tesla is not left stranded when its electricity runs out, the United States had to install recharge stations when Tesla first arrived. You'll see why that is not really practical when you contrast that with the topography of India.

But that is really a personal perspective. Yes, the infrastructure is being established; there are Indian companies that produce both vehicles and electric bikes.

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