CHANGING RULES FOR MUSK WON’T GUARANTEE RETURNS

New Delhi would possibly level out that different insurance policies designed with specific firms in thoughts have succeeded. In 2020, the federal government tweaked the principles round manufacturing and promoting cellphones in India in a bid to draw Apple. The US expertise big has since produced US$7 billion value of merchandise in India, with a promise to scale as much as US$40 billion throughout the subsequent few years.

But Tesla isn’t Apple. For one, no policymaker anyplace ought to assume {that a} determine as impulsive as Musk will comply with by on a promise of this kind.

Apple additionally has a real enterprise case for manufacturing in India. The home marketplace for iPhones is rising solidly. Morgan Stanley predicts that India will account for a fifth of Apple’s consumer progress over the following 5 years and generate US$40 billion of income over the following decade. Half of the US$9 billion that cellular handset exports earn India comes from iPhones.

Tesla is unlikely to see the identical type of progress in India’s extraordinarily price-sensitive auto market. Many different overseas producers have did not crack India’s automobile code. In 2021, Ford Motor shut down its factories within the nation after twenty years, taking a US$2 billion restructuring hit, partly as a result of it couldn’t compete on worth.

One Indian auto govt stated on the time that the important thing to the home market was to “look at the whole value chain from raw material to resale and then, at every stage, you have to see how you can economise”. That doesn’t sound like one thing Tesla has achieved properly traditionally, which is, in fact, one more reason why Musk has held out for thus lengthy on an India transfer.

As just lately as July, Indian officers have been insisting that “no special policy” can be framed to lure Tesla to India. So, what may have modified?

Musk’s preferences actually haven’t. More possible, the federal government – now simply months away from a re-election marketing campaign – is prepared to go the additional mile for a good-news headline.