Tesla CEO Elon Musk is one of the richest men in the United States, but getting him and others to pay more taxes has been problematic. Photo: AFP

Electric-car maker Tesla Inc’s entry into the Indian market will soon be a reality. While taking part at an event organized by the Indian Express newspaper, India’s Road Transport and Highways Minister Nitin Gadkari on Monday confirmed that the US firm will “start operations” in the country early next year.

The minister said Tesla will start operations first with sales and then look at assembly and manufacturing based on the response to the cars. He emphasized that the government was committed to promoting electric mobility and that various Indian original equipment manufacturers are also working on battery-powered vehicles. He added, “India is going to become a number one manufacturing hub for auto in five years.”

Recent reports suggest the first model to come to India will be the Tesla Model 3, the booking for which could start in a few weeks and sales may begin in the second half of the year. The completely built units will be imported and likely to cost 5.5 million rupees (US$74,813) onward. However, for the price-sensitive Indian market this price point will be on par with luxury cars and may be beyond the reach of most buyers.

Tesla will most probably handle sales channels directly and not involve any dealer, as it does in other parts of the world. It sells cars from its own showrooms, manned by its employees.

Tesla CEO Elon Musk, who has been interacting with Indian Twitter users for many years, had tweeted in October that the company was ready to enter the Indian market next year. “Next year for sure,” Musk said in response to a tweet that posted pictures of T-shirts with “India wants Tesla” and “India loves Tesla” printed on them. “Thanks for waiting,” he added.

Musk had said: “Will release order configurator probably in Jan.” Tesla sales teams are reportedly working on building custom sales and production orders for the India market, ensuring orders are complete and validated once the configuration is finished.

Tesla currently has only one Gigafactory in Asia, which is located in Shanghai, China. It is not yet clear whether it will eventually set one up in India. Earlier reports had mentioned that Tesla may set up a research and development center in Bangalore. The city is also home to many of India’s electric vehicle startups such as Ola Mobility, Ather Energy, Mahindra Electric as well as units of Toyota, Daimler and Bosch. Some other reports stated that Tesla’s first facility in India may come up either in Kerala or Maharashtra states.

India is looking to boost electric mobility with the twin objective of reducing air pollution and cutting down on fossil fuel imports. Many of its cities, including capital New Delhi, figure among the most polluted in the world and vehicular pollution is one of the major reasons. The country is also ramping up its charging infrastructure for electric vehicles to encourage more people to use battery-operated vehicles.

It had earlier set an ambitious target of attaining full electric mobility by 2030, but had toned it down to 30% in the wake of fierce criticism. Financial services firm Avendus has projected that India’s electric vehicle market will touch 500 billion rupees by 2025. It expects electric vehicle sales to exceed three million, with the majority of them being two and three wheelers. As for four-wheelers, Avendus says that in the medium-term electric vehicle adoption will be confined to commercial or fleet applications.