Ahmedabad: Gujarat is a developed state in whose industrial map several foreign companies have made their mark in the last several years. On January 21, news came that one more well-known foreign automobile company has been negotiating with the government to set up its production unit in Gujarat. Tesla, the electric car manufacturer founded by tech billionaire Elon Musk, wants to leave China and has been exploring the possibility of setting up its plant somewhere in India.
Welcoming the development, deputy chief minister Nitin Patel told media persons that many companies were in contact with the Gujarat government to explore the possibility of shifting their manufacturing unit from China to Gujarat.
According to a senior state government official, the government was in discussion with Tesla, which has set up its registered office in Bengaluru, and the state has offered it all kinds of incentives for setting up its manufacturing base in Gujarat.
Tesla, a leading name in electric car manufacturing, has set up its registered office in Bengaluru to carry out its research and development activities.
The company is now in contact with Gujarat and other states with a view to expanding in India. Tesla Incorporated is an American automobile and solar energy company. It is based in Paulo Alto, California. The company makes a solar city, solar panels and solar roofs.
Tesla’s expertise ranges from domestic to grid grade solar energy, electric automobile manufacturing and energy storage battery. The company was founded in July 2003 as Tesla Motors. Elon Musk is Tesla CEO since 2008.
Tesla has been manufacturing the world’s largest selling plug-in battery electric passenger car since 2019. It has 17 percent market share in the plug-in segment and 23 percent in the electric battery segment.
Tesla had globally sold 4,99,550 vehicles in 2020 which was 35.8 percent higher than last year. The company had manufactured one million cars in 2020.
India offers encouraging environment to Tesla
Why should Tesla not interested in coming to India? Looking at the India Energy Storage Alliance (IESA) report one finds that the electric car market is expected to reach 63 lakh units per year by 2027. During the same period, there would be an increase in the demand for a battery. In 2019-20, 3.9 lakh units of the electric car were sold in India. It is evident that people in India are showing their preference for electric cars. It is learned that Tesla will enter the Indian market with its most popular model. If it finds an encouraging response, the company will consider launching its S and X models. The popular model is expected to be launched in the beginning of 2022. There is no information about Tesla’s launch date and pricing. At present, Tesla is exploring its development prospects not only in Gujarat but also in other states. Tesla is discussing with the governments of Maharashtra, Tamilnadu, Andhra Pradesh and Karnataka. At present, speculation is strong that Tesla is likely to set up its manufacturing plant in Gujarat.
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Why is Gujarat’s case strong?
Great efforts have been made in the past to develop Gujarat as the renewable energy hub. The government has given it a top priority. The electricity tariff in Gujarat is expected to become more competitive than other states following the implementation of the large solar plant project and the Kisan Suryodaya project. Tesla can gain from this. Gujarat also has a strategic advantage such as modern ports with access to international sea routes and connectivity to all major markets within India. According to knowledgeable sources, with the arrival of Tesla, there would be major changes in the mobility market in India. Gujarat government’s policy on electric vehicles too will get a boost. Tesla’s coming will also give a fillip to India’s electric vehicle manufacturing and give a new direction to mobility. Once the manufacturing of electric vehicles begins, the development of its associated infrastructure would also start.
Gujarat also has an ancillary of auto majors
Major auto companies including, Tata Motors, Ford, Suzuki Motor Corporation, Honda Motorcycle, Scooter India, Hero Moto Corp, and MG Hector have manufacturing plants in Gujarat. Besides, there are ancillaries of Apollo, MRF, Maxis, and CEAT companies. After bringing the TATA Nano plant in Sanand, Bahucharaji – Mandal Industrial area in Gujarat have emerged as the biggest automobile hub of India. The automobile industry got attracted to Gujarat because of its advantages such as rail, ports and highways, uninterrupted electricity supply, skilled manpower, and other infrastructure facilities. Three Japanese ancillary companies, Asti Corporation, Koito Manufacturing Company, and Murakami Corporation came to Sanand and Mandal Industrial cluster only in 2019. Ancillary units play an important role in the easy supply of parts for the manufacturing of automobiles.
The arrival of Nano made Gujarat a favourite of automobile companies
It has been over a decade since the Tata group shifted its plant of the cheapest Rs 1 lakh Nano motor car plant from West Bengal’s Singur to Sanand in Gujarat under the patronage of the then chief minister Narendra Modi.
After the decision to set up the Nano plant at Sanand, the Gujarat government gave 1100 acres of land to Tata Motors from the 2200 acres owned by the Anand Agriculture University.
Besides, the Modi government also gave Rs 9,870 crore 20-year long term loan to the Tatas at 0.1 percent interest. This was done against the payment of VAT. The government also exempted Tata Motors from stamp duty, registration fee, and land transfer fee. The Nano project was also supplied 14,000 cubic meters of water and 200 KVA of duty-free electricity. National media started hailing Gujarat as an automobile hub after this. Since then, Gujarat became a favorite state of the automobile industry. Thereafter, the Gujarat government provided institutional support in the form of SEZ, railway, cheap manpower, relaxation in terms of employment, setting up of institutions for skill development in an aggressive move to make the state an attractive destination for industrial investment.
Gujarat’s MSMEs are essential in the value chain
For investors in automobile industries in Gujarat, the existence of a value chain is part of the ecosystem. The auto sector accounts for ten per cent of the state’s engineering production. The state government has set up the Japan India Institute of Manufacturing in Mehsana while there is the Siemen’s centre in PDPU to ensure skilled manpower for the 30 automotive clusters. Thus the value chain of MSME got transformed into value addition. The government has 20 incentive schemes for this sector. One would have heard about many of these incentive schemes such as ease of doing business, single-window clearance system, and plots in GIDC at 50 per cent less price.
A high goal set for renewable energy
Gujarat solar power policy was announced in the last week of December 2021. One must recall what the Rupani government had indicated. Rupani had said that the government is making all efforts for all-round development of renewable energy. In the new policy to the state government has announced several incentives to promote clean and pollution-free renewable energy. Rupani had said the use of solar energy by small and medium scale industries would decrease the production cost. The larger industries too, by using solar energy, would be able to compete effectively in the global market.
Gujarat, automobile hub of India
Large clusters of automobile industries have come up in Gujarat besides Sanand, Mandal, and Behcharaji. In Rajkot, there are over 500 units manufacturing auto components. Three more auto component clusters are coming up in and around Rajkot. Similarly, 4 to 6 new auto clusters are going to come up in Ahmedabad. These new clusters would have units of Maruti Suzuki, Hero Motocorp, and Honda. Plants of General Motors in Halol and Ford in Vadodara have been operating for the last many years. Everyone knows about the automotive companies in Sanand as many reports have been published about them in the last ten years. No global investment or Vibrant Gujarat summit has been held without any activity related to the automobile industry sector. Therefore, it is not surprising that the Gujarat government is eager to welcome the Tesla plant in Gujarat and is making all efforts to persuade this automobile giant to set up its plant in the state.
Opportunity of direct employment
Tesla Automobile Company belonging to the famous businessman Ellan Musk is coming to India. The company manufactures battery-operated green car. It is bringing its plant to India. It is possible that the company sets up its plant in Gujarat. President of the Sanand Industrial Estate Ajit Shah told ETV Bharat that whenever an automobile company comes to any state, it comes with four times more investment. Because of this, local MSMEs get business and employment opportunity is created. There is the scope of direct employment in the company. These companies also build their own infrastructure. In India, Pune and Chennai are famous because of automobile companies. For the same reason, Sanand too has become famous.
