Tesla penetrating Indian Markets- boon or bane?

Media flooded with tweets and opinions on Monday,as Minister for road transport and highways Nitin Gadkari reported that tesla is all set to enter into Indian markets in early 2021. Excluding the hype created for musk himself, would it really benefit our country?

THE NEWS

There was a prior problem when tesla aimed at introducing itself to the Indian markets in 2016,there was a 100% import duty on cars above 27 lakhs,and an additional road running tax too. But now,in 2021, the first tesla car to be introduced to India would be the tesla Model-3,likely to be priced around 55 lakh rupees.

Gadkari added that the company for now would focus on sales, and then maybe move on to assembly and manufacturing as he envisions to see India as the number one hub for automobile production in 5 years.

ARGUEMENTS IN SUPPORT

The environment factor

Earlier this year, when the NITI aayog report was released,it had the plan to electrify the whole automobile outlook in the country by 2024. India is for sure in need for pollution control, as vehicles are responsible for 66% of air pollution deaths in India. There is a need to reduce the dependency on a fossil fuel based economy. And while plans like odd and even do not work in every state, the amount of carbon dioxide generated is humongous.

Need for digitalisation

India is pushing every scheme now and then, right from startup india to digital india, to promote a technological connect of the economy.And at this point, introducing foreign companies like tesla aim at building a stronger backdrop for the same.

The brand name

Tesla has a global market share of about 18% EV’s. While the traditional manufacturers like Toyota are fighting to maintain their position in the market,Tesla, with each model keeps developing better. Tesla has maintained an 81.66% market share of the EV market in the US during the first half of 2020, often beaming on stock markets, and it stands as the most valuable Automobile company right now. It’s share price even hit a 1000$, that too in the middle of a pandemic. And the biggest contributor to it, is the CEO himself, Elon musk. So why wouldn’t a country want to invite such a technologically equipped manufacturer on its soil?

ARGUEMENTS IN OPPOSITION

Price

While all of the buzz shines as a golden opportunity,we forget the very fact that why India isn’t equipped with electric vehicles. Because of it’s price. A cost analysis done by Kearney reveals,that it would take three to five years before batteries are available at such price points in India. And if vehicle is introduced at 55lakhs, that too a Model 3, it would take years for the middle class group to get it’s hands on it.

Self sufficiency

While we chant of going vocal for local for local for petty products,and Aatmanirbharta, we do forget that as the biggest automobile company would penetrate the Indian markets, it would slowly eat up the share of the existing companies. A step that could’ve been taken here could be developing a healthy market for EV’s with Indian manufacturers like Tata,which already produces electric vehicles and then letting the foreign firms enter into it, for a healthy competition.

Increase in competition

The year 2020, without doubt, was the worst ever for the Indian automobile industry. Maruti Suzuki Q1 FY21 sales down by 82.1%

In April, there was zero automobile production in the country. Tata Motors alone posted a consolidated loss of ₹217 crore in Q2FY20, while revenues fell 9% YoY to ₹65,432 crore.

In this critical situation, when the Indian automobile manufacturers would take some years to recover, is giving a blow by introducing the biggest automobile manufacturer really helpful to the domestic market?

Think for yourself, when the outer shinier layer of Elon Musk’s company entering India fades away, would it really be beneficial for us?