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US-based electric carmaker Tesla’s plan to start selling its vehicles in India has faced several roadblocks over the past few months. The company is now negotiating with the Indian government to resolve existing issues and start selling its vehicles.

It has been learnt that Tesla has started talks with the government to figure out the procedure involved in setting up fully-owned retail outlets as it needs to comply with Foreign Direct Investment (FDI) guidelines related to single-brand retail. The plan to sell its vehicles also include local sourcing norms, reported Business Standard.

Tesla had already written to the government earlier, requesting it to reduce high taxes applicable on its imported electric vehicles. Complying with the FDI guidelines is another challenge that Tesla will have to overcome to start selling its vehicles in India.

The report also noted that companies with proposals involving over 51 per cent foreign stake in single-brand retail must source 30 per cent of the value of their goods from India. All procurements made in India by such companies will be traded as local sourcing — be it for domestic or overseas sales.

It may be noted that Tesla has set up its own retail networks globally rather than going for external dealer networks. The company also sells its vehicles online.

Some industry experts believe that Tesla has been sourcing auto components from the country after signing up a non-disclosure agreement. Meanwhile, recent reports also indicate that Tesla may increase local sourcing in India and has engaged in talks with at least three domestic manufacturers.

While Tesla initially plans to import its vehicles, the company plans to expand its business in India including local production and sales. However, Tesla boss Elon Musk had earlier indicated that it may look to build a production facility in the country based on demand.

As the situation stands, the market share of electric vehicles in India is less than 1 per cent due to lack of infrastructure and high pricing. To make matters worse, Tesla’s EV models will become almost twice as expensive if the government does not agree to cut import duty.

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