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Tesla has proposed setting up a factory in India to build electric cars for domestic sale and export, the carmaker told government officials on Wednesday, according to a source with direct knowledge of the matter.

The proposal comes after India refused to conform to Tesla’s request final 12 months to decrease the import tax on automobiles, which may attain as a lot as 100%. India needed the carmaker to construct autos regionally however Tesla needed to check the market first with imports and the talks led to impasse.

Whereas Tesla didn’t talk about decrease import taxes with Indian officers, it proposed establishing a brand new manufacturing unit, albeit with out specifying a location or funding, stated the supply, who declined to be named because the talks have been non-public.

Making automobiles regionally aligns with Indian Prime Minister Narendra Modi’s pitch to draw firms along with his “Make in India” marketing campaign, particularly as firms look to diversify their provide chains past China.

Senior Tesla executives are in India this week to fulfill the federal government to debate native sourcing of elements and different points, Reuters reported on Tuesday.

Tesla met officers from Modi’s workplace and different ministries on Wednesday, stated the individual and one other supply aware of the matter.

Tesla didn’t reply to Reuters’ request for remark.

The electrical carmaker’s renewed curiosity in India comes almost a 12 months after it placed on maintain plans to promote automobiles within the nation after failing to safe decrease import taxes, which its CEO Elon Musk stated are among the many highest on this planet.

Tesla had employed a neighborhood group and commenced a seek for showroom house, however that was additionally deserted final 12 months.

The assembly comes weeks forward of Modi’s go to to america in June.

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