Tesla, Twitter & Telangana: KTR triggers storm

M Somasekhar

Will the Tweet invite from K T Rama Rao to Elon Musk to set up the Tesla electric car unit in Telangana gather steam and turn real?

It has definitely raised a storm on the social media handle, Twitter and woken up quite a few states to jump into competition to woo the world’s richest man to park the project in their State.

Telangana’s tryst with attracting manufacturing companies has not been very fruitful. Right from the controversial Volkswagen project during the united Andhra Pradesh time to the most recent Ola Cabs unit that went to neighbouring Tamil Nadu, it’s mostly misses.

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There has been no dearth of pro-active leaders from N Chandrababu Naidu to Dr Y S Rajasekhara Reddy in united AP and now, Industries and IT Minister, K T Rama Rao. Also, they wielded power, quick decision making and land resources.

So, what’s the glitch that’s holding back big manufacturing companies from landing in Telangana State? In one sentence, it’s the enabling ecosystem and a port link for exports, say experts.

This is very true in the case of large manufacturing companies, especially global or Indian companies eyeing export markets that want to set shop around Hyderabad. Sectors like automobiles, renewable energy and product companies, especially face these problems, the experts point out.

Notwithstanding these limiting, which the Telangana government needs to urgently introspect, the State has achieved some breakthrough recently in manufacturing thanks to the proactive approach of K T Rama Rao. The case in point is Kitex Group. Sabu Jacob, the Group Managing Director announced in July 2021 that it would invest Rs 2,400 crore in textile sector, which could provide employment to 22,000 people.

Buoyed by this success and with Hyderabad doing very well as an IT destination with global names like Microsoft, Apple, Google, Facebook and Indian biggies like Infosys, Wipro, Cognizant etc., K T Rama Rao has set his sights higher.

In this context, the Twitter invite to Tesla, the world’s largest electric vehicles manufacturer could be a right start for 2022. Telangana has put in place an EV Policy in 2020 and is ready to offer land and quick decisions through its friendly Industrial Policy.

Tesla, Telangana & Elon Musk

Elon Musk, the world’s richest man with ‘out of the world’ ideas never ceases to surprise. His ambition into Space with Space X and driving round the globe with his futuristic models of the Tesla electric Vehicles are but two successes to showcase.

But, the entry of Tesla into India with its electric vehicle car has turned out to be a tough challenge to Elon Musk. The Union Government and concerned Minister, Nitin Gadkari have put many conditions, specially the mandate to manufacture in the country. Net result is that the project got delayed through 2021.

Early in the New Year, suddenly, the interest in bringing Tesla into India got a big boost with nearly half a dozen political leaders sending out open invitations to the Tesla boss to check their state out.

The excitement began when Elon Musk himself tweeted on January 13 that, “We are still working through a lot of challenges with the government.” He was reacting to one of his billions of followers query asking when Tesla would enter the Indian market.

But, the spark to the growing chorus of ‘Come to my State’, competitive bidding was ignited by the media-savvy, K T Rama Rao with a well directed, informal tweet on January 14. He tweeted “Elon, I am the Industries and IT Minister of Telangana, will be happy to partner with Tesla in working through challenges.”

This set off an avalanche of activity on the Twitter space. Within hours, Navjot Singh Sidhu of a Punjab State extended the invitation. In the next 24 hours, the Governments of Maharashtra, West Bengal and Tamil Nadu too joined the race.

For the record, in January 2021, the global major had registered in India as Tesla India Motors in the State of Karnataka.

The contentious issue

The Tesla Chief wants the Union government to reduce import duties before it drives into the Indian market in strength.

The government, on the other hand, is adamant that Tesla should produce in India rather than assemble Completely Knocked Down parts (CKD), as the minister, Nitin Gadkari has articulated.

At present, India imposes 100% import duty on fully imported cars with a Cost, Insurance, and Freight (CIF) value of more than $40,000 and 60% on cars whose CIF value is less than the amount, as per government norms.

What happens if the Government acceded to Tesla’s requests? Experts feel it will be unfair to several other players in the Electric Vehicle (EV) industry who are now complying. Very recently, Mercedes-Benz announced that it will launch India’s first locally produced luxury electric car in 2022.

The way forward

Even as the states jumping into the fray has increased the interest in the EV market, the Maharashtra minister for Tourism and Environment, Aaditya Thackeray’s reported suggestion has added a new dimension.

In a letter to the Union Finance Minister, Nirmala Sitharaman, he suggested that the Union should lower import duties on electric vehicles. Companies like Tesla, Audi, BMW, Rivian etc., must be given a time bound concessionaire customs rate for the import of vehicles for retail sale. This will drive the aspiration value in the market, boost investment in our supply chain and encourage the startup ecosystem, he said.

At the moment, the Indian EV market is in the beginning stage. It is seeing the entry of many players and the government is also laying lot of emphasis to give a boost. Automobile majors like Tatas, Maruti, and Mahindra etc. have already offered electric cars. However, the sales and adoption of these eco-friendly vehicles, which are expensive and also need a reliable infrastructure in charging stations and good battery support, remains low in India.

Tesla’s arrival will surely accelerate the growth.

Somasekhar Mulugu, former Associate Editor & Chief of Bureau of The Hindu BusinessLine, is a well-known political, business and science writer and analyst based in Hyderabad

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