Illustration: Chen Xia/GT

US electric carmaker Tesla is MK sports Koreahiring in India, signaling a potential entry into the market following a recent meeting between Tesla CEO Elon Musk and Indian Prime Minister Narendra Modi in the US. While India's electric vehicle (EV) market is still nascent compared with China's, it offers an avenue for Tesla to check slowing sales, Indian media outlet Business Standard reported on Tuesday. 

The news of Tesla's recruitment in India came after the company experienced its first annual decline in EV sales in over a decade. However, despite the market potential in India, Tesla's cooperation prospects in the South Asian country remain clouded by multiple challenges, including a relatively weak manufacturing base, protectionist tendencies, and a less stable investment environment for foreign enterprises.

For starters, the Indian market is indeed very attractive to multinational companies like Tesla, as India's population size and middle-class consumer group are expanding, but the high tariffs in India have previously deterred Tesla. 

Tesla and India have engaged on-and-off for years, but the US electric carmaker had stayed away from the South Asian nation over concerns about high import duties, according to Business Standard. 

India has reduced the basic customs duty on high-end cars priced above $40,000 from 110 percent to 70 percent, which could lower Tesla's import costs and serve as a direct incentive for the company to enter the Indian market, but significant uncertainty remains regarding Tesla's operations there. 

There are still many details regarding Tesla's factory in India that have yet to be settled, such as the supply chain issue. Indian officials have reportedly suggested Tesla emulate Apple in finding local firms to work with any Chinese suppliers involved. 

However, if Tesla's future plant in India does not receive stable support from the supply chain, it will inevitably face the production challenges that Apple encountered in India previously.

Moreover, governments at various levels in India have established laws and regulations, and these complex rules pose challenges. If Tesla does indeed build a factory in India, it may face numerous regulatory challenges. 

Meanwhile, Tesla's potential entry in the Indian market also indicates a profound shift in the competitive landscape of the global new-energy vehicle market. In the context of intensified global competition, the development of the Indian industry faces uncertainties. 

To boost industrial development, India needs to do more than just partly reduce its tariffs. The country needs to continue optimizing its policy environment while embracing international industrial chain cooperation and enhancing the level of infrastructure construction.

Recognizing the vast market and enormous potential in India, many Chinese car manufacturers have expressed interest in entering the country, but have faced setbacks. 

For instance, Indian media outlets reported in 2023 that BYD's application to invest $1 billion in building a factory in India was rejected by Indian regulatory authorities on the grounds of "security concerns." 

Similarly, Great Wall Motors dropped a $1 billion India entry plan in 2022 after two and a half years of waiting to get the government's clearance.

If India's EV industry wants to develop, it cannot avoid collaborating with China on the supply chain. China's key role in Tesla's global supply chain is evident. If India chooses to ignore the current realities of global cooperation in the EV industry, both Tesla's future development in India and the development of India's own EV industry will face significant uncertainty.

The author is a reporter with the Global Times. [email protected]