Tesla would never set up its manufacturing plant in a country where it wouldn't get permission to sell cars before setting up the plant. This was said by the CEO of Tesla, Elon Musk in a similar tweet, an Indian individual asked Elon Musk to launch Tesla in India as soon as possible. Elon Musk replied straight away, that India has the highest import duty in the world compared to any other country This statement is right. In India, the CIF or Cost Insurance Freight of any vehicle is under $ 40,000 or INR 32 Lakh, in this case, a 60% import duty is levied, and if CIF exceeds $40,000 then a 100% import duty is levied and an additional amount of 10% is charged for Social Welfare named CESS.

Due to this reason, the Indian government suggested Tesla that Tesla should assemble the complete knockdown unit of its cars in India and take 30% of the parts from local manufacturers. Still, Tesla stood its stubbornness and replied that the Indian Manufacturers were incapable of assembling the sophisticated parts of the Tesla. Due to this statement, the Road and Transport Minister of India, Shri Nitin Gadkari answered in an interview with India Today that, if Tesla thinks that they can sell cars in India by manufacturing them in China, they won't be permitted for this at any cost.

Nitin Gadkari's Forceful Impact: Tesla Manufacturing in India

Still, now there is a twist in the story this battle that started in the year 2017 between Tesla and the Indian Government has come to an end. Tesla has lost the battle, according to the report published by the Financial Times. Now Tesla is interested in setting up its manufacturing plant in India. In this article, you will delineate how Tesla changed its mind and pivoted to 180 degrees! how this is an extraordinary achievement for India and the Indian government? To know about vacillating thoughts by Tesla. We have to dig deep into the roots of Tesla.

The History of Tesla: From Denial to India Entry

Tesla has been a revolutionary company since its beginning. They do not sell a car but the technology Tesla Roadster was launched in the early days of Tesla since it was a sports car it was not bought by many customers. But the launching of the Tesla Model S was an interesting event it was a luxury car that attracted people from all around the world. The launching of the Tesla Model 3 in the year 2017 was a bigger event. Because it was a mass-market electric car gradually it became the best-selling electric car in the world. 

Due to these cars, Tesla captured 50% of the EV car market in the US. Now this looks very fascinating but the ground reality is somewhat harsh. By the way, In the year 2019, 59 Million units of fossil fuels-based cars were sold around the world and only 2.1 Million units of EV cars were sold which only 3,66,000 units of Tesla Electric cars were sold in the year 2019. The biggest point to note is that 50% of the revenue of Tesla is generated in the US alone this makes it clear that Tesla does not have a major global presence and that's why Tesla wants to expand globally.

Why Tesla wants to expand Globally?

The manufacturing of Tesla cars is done in giga factories at their full capacity, These factories can produce 2 billion units of EVs around the year and Tesla has 3 such factories in the US. One each in Nevada, New York, and Texas but if look, apart from the US Tesla has two other giga factories as well one each in Germany and Shanghai, China. It is not a surprising fact that Tesla opted for Germany to set up its manufacturing plant since it is an auto hub similar to China is the largest auto hub in Asia. 

Tesla has highly benefitted from this decision Tesla had revenue of $ 40 Billion in the US and from China. Tesla generated revenue of $ 18 Billion gradually, China became the second largest market for the US where Tesla was selling 40% of EVs. Tesla was selling 50% of its cars in the US, 40,% in China, and the remaining in the rest of the world but everything isn't fruitful for Tesla in China.

Overcoming China's Dependency

Tesla was undoubtedly earning money from China but it also had to face many difficulties there what can be the biggest problem in the market? Yes, competition. China is the second-largest market for Tesla. But Chinese Manufacturers like BYD, Nio, Geely, Xpeng, etc. are giving tough competition to Tesla in the local market of China and their USP is a competitively lower price. 

As Chinese cars are much cheaper in comparison to these, the price of Tesla ranges from $ 40,000 to $ 70,000 in China and apart from this, the incentives provided by the Chinese government for pushing local industries and non-implementation of IP rights is a big problem for Tesla. In China due to these IP rights, Chinese Manufacturers can copy any product without any hesitation. They make various versions of Range Rover, Jeep Wrangler, etc. they can copy any product. Now these are the problems associated with the operation of Tesla in China.

The second problem Tesla must face in China is the quality Issue. We all know the manufacturing quality of China, especially in the early stages of any new product and if we look at the report published by Bloomberg then Tesla has to reduce its manufacturing capacity by around 56000 units due to quality issues. From December 2022 to December 2023 due to this bad quality of manufacturing, Tesla had to recall 1 million units of EVs. Apart from this, the US-China trade war is another problem for Tesla. 

“South China Morning Post” is a China-based news portal, According to a report published by this portal Chinese Government has suspended Tesla from expanding its manufacturing line in Shanghai. In the meantime, in March 2021 Reuters reported that due to suspicion of spying, The Chinese government is not allowing government servants to park their Tesla cars outside their offices due to these problems. The sales of Tesla in December 2022 were reduced by 21% on a year-on-year basis due to these problems, Tesla understood that it does not only require a major market. But a market whose relationship is good with the US and India is one of them.

Why Tesla Sees India as Its Only Viable Option?

Tesla wants to capture the South Asian Markets and as discussed above Tesla is fed up with China the second option which is the only viable option for Tesla to manufacture its cars is in India. Despite ignoring India easily in the year 2017 but now Tesla could not do this and the biggest reason for that is the work done by the Indian government in the past few years. To establish the ecosystem of Electric Vehicles in India. India might have started it late but now the Indian government is stringent regarding carbon emissions.

Schemes regarding Electric Vehicle

By the year 2030, the goal of the Indian government is to reduce carbon emissions by 45%, and by the year 2070, achieving the goal of net zero carbon emissions and EVs are going to play a major role if foreseen. That is the reason why the Indian government has launched the “Fame Scheme” which is the Faster Adaptation of Hybrid and Electric Vehicles. In this Scheme, the consumers are incentivized to buy Electric Vehicles, this policy actually works especially in cost-dominated markets like India and looks at the success of this scheme.

The Indian government has launched Fame-2 here an investment of 10,000 crores will be made under this scheme, EV infrastructure like charging stations and setting up plants for the manufacturing of batteries used in EVs. An estimated 20 Lakh passengers would be benefitted from this scheme additionally  4,00,000 charging stations would become functional. Together with this, the Indian government has asked companies like Ola and Uber to keep 40% of their vehicles as EVs in their fleet.

The semiconductor venture of Vedanta and Foxconn 

Apart from this, the Indian government is working hard to establish the EV ecosystem in India. In September 2022, a joint venture of INR 1,54,000 Crores was established with Foxconn and Vedanta For the Manufacturing of Semiconductors in India Semiconductors are highly essential. Semiconductors are used massively in EVs in comparison to IC Engine based vehicles, we can understand this fact with the example of vehicles manufactured by Ford. Ford’s focus is an IC engine-based vehicle it uses around 300 semiconductor chips but Ford Mach-E is an electric vehicle it uses around 3000 semiconductor chips. Hence setting up semiconductor manufacturing plants is highly important. 

Apart from this, Indian OEMs have even developed large component bases in India. Here fabricators, differential gears, and motors would be manufactured. Even after all this god made a joke with Elon Musk massive mines of Lithium were discovered in Jammu and Rajasthan and that's why major Indian brands like TATA Motors would be able to invest in the batteries of EVs. This shows the changing ecosystem of EVs in India Due to these reasons, Tesla is forced to set up its manufacturing plants in India. Selling and exporting cars from India the biggest credit for these achievements goes to none other than “Shri Nitin Gadkari”. This type of vision and attitude gives a direct warning to Tesla that you are heartily welcomed in India. If not, you will suffer because good electric vehicles are now being manufactured in India.

After all these initiatives We should learn from these for the future before opting for foreign-brand EVs we should establish the infrastructure and ecosystem for EVs in India. So foreign countries are forced to come to India whether by wish or not, now Tesla is going to manufacture its EVs in India.

How this will benefit India? 

The biggest benefit of the establishment of manufacturing plants in India would be the collaboration of Tesla with local manufacturers. Due to this, the local components suppliers and other companies would learn a lot. In contrast, the engineers working in these local firms would become highly successful when the people working inside Tesla would switch to some other Indian company or any other company operating in India. Their knowledge would be delivered to those companies this is very obvious. 

The biggest example of this is American Rivian, an Electric truck company. Many engineers work here that once used to work at Tesla, share their knowledge with each other With this, they can deliver superb electric trucks consumers would also be one of the most benefitted people in India. 

Tesla after introducing its vehicles in India the Indian companies or the foreign companies operating in India would be forced to introduce technological advancements. They would also be forced to bring their vehicles at cost-effective prices. That would be beneficial for the Indian consumers and market as well.

Thus, the relentless efforts of the Indian government, particularly Shri Nitin Gadkari's remarkable efforts and strategic approach influenced Tesla's decision to open a manufacturing plant in India, defying Elon Musk's previous denial.

 America is famous for its top fuel dragster, NASCAR, and IndyCar races. Car drift is a popular sport in Japan. World famous Dakar rally is organized in Saudi Arabia. Similarly, World Rally Championships are organized in various countries in Europe. Likewise, F1 and MotoGP are world-class motorsports. Races of these championships are organized in various American, European, and Asian countries. But in terms of motorsports, there is almost nothing in India.

Even though India is a vast country today, It has the 5th largest economy in the world, along with has 2nd largest road network in the world. Today, India has the 4th largest market of cars but still, no major motorsports are organized in India. Neither India is known for any of its specialized motorsport like Thailand.

Thailand has a very small economy in comparison to that of India but still, Thailand's own specialized motorsports are organized Thailand like Boat drag racing and sidecar motorcycle racing. Even though it is a developing nation still, many major international motorsports are organized in Thailand like MotoGP. A similar thing could be observed in Brazil as well which is also a developing nation, and the 12th largest economy in the world. But still, F1 racing has been organized in Brazil for a very long time. Hence the question arises When motorsports are appreciated a lot in many developing and developed countries then why it is not appreciated in India.

Discover the intriguing reasons behind the lack of motorsports racing in India. Delve into the cultural, economic, and infrastructural factors that have hindered the growth of this thrilling sport in the country, and explore the potential for its future development.

Why Motorsport Racing Hasn't Revved Up in India?

Does India not have an audience for motorsports? No, Not! According to the Survey conducted by Neilson in the year 2019. India is among the top 5 countries in terms of F1 fans. The problem in India does not lie with the people but with the government bodies, the Indian government never tried to promote motorsports. But the state governments literally murdered the motorsports in India in the year 2011 when F1 racing was introduced in India. This game of motorsports is huge for business enthusiasts not only among the ones whose interests are hampered by the government.

But it harms the Indian economy as well F1 is not the only motorsport through which huge money is earned. F1 racing is the 5th largest sport in the world. Major motorsports like F1 also attract foreigners to your country Monaco and Saudi Arabia are two major examples that attract tourists in large numbers from foreign countries and that's why we will understand this in detail in this article the reason behind the lag of motorsport in India.

Why motorsports do not exist in India? And what all we are losing because of it?

To know about all these questions, we must have prior knowledge about the racing history of India India has an ancient history of motor racing. Motor racing was started in India before its Independence, In the year 1904, the Motorsport Union of Western India Conducted the first motor race in India, this race started in Delhi and ended in Mumbai. This race had a huge track to cover these types of races conducted in India because the European auto brands wanted the Indians to be convinced of the fact. The Indian roads can be used to drive vehicles. As there were not a lot of cars at that time the European brands wanted to promote their cars in India. So that rich people in India can buy their cars with this, there was an increase in the imports of cars. In India and till the year 1930, the majority of cars were imported into India from foreign countries.

But by the end of the 1940s, many Indian companies established joint ventures with foreign car manufacturers with this, the assembling and manufacturing of cars started in India and gradually, the number of cars started increasing in India, and due to this many people in India became enthusiastic about motor racing. To fulfill their passion, many car lovers in India started using airstrips developed during World War 2 as car racing tracks. Like Juhu airstrip, Sholavaram, located in Tamil Nadu, and Barrackpore, located in Kolkata. These airstrips were converted into racing tracks these racing tracks gave birth to local motorsports clubs in India, Madras Motorsport Club MG Club, and Mumbai and Bengaluru Motor Clubs.

What is FMSCI?

But still, India did not have any governing body for controlling the motorsports in India and at that time all these clubs together formed FMSCI. Even today, all the motorsports whether minor or major events that are conducted in India are controlled by FMSCI today If we observe, FMACI does not have anything to control. on one side Malaysia and Middle Eastern countries host world-class motorsports like F1, Dakar Rally, and MotoGP. On the other side, India does not organize any major motorsports events.

Today, India only has 1 or 2 global standard-designed motor tracks and these tracks are located explicitly in Delhi and Mumbai due to this, it is very difficult or next to impossible for learners and racing enthusiasts to carve their skills in a country where racing events are not conducted. Finding a racing driver in such a country is just like looking for water in a dried well even today, motorsports are primarily linked with Narain Karthikeyan in India. But he is not even a star racing driver because still, Narain Karthikeyan has not won any major motorsports world championship this absence of motorsports in India forces the Indian youngsters to opt for cricket over racing Sachin Tendulkar, Virat Kohli, and Mahendra Singh Dhoni are among the most famous Indian cricketers. But the question arises.

In India, car racing was started many decades earlier than in the Middle Eastern countries and when people used to ride on camels in Middle Eastern countries, people were driving cars on Indian roads. But then, Middle Eastern countries left India far behind in terms of motorsports,

Why does India have such poor conditions in motorsports? 

The previous Indian governments are responsible for this FMSCI was formed in the year 1971 in India In the year 1973, it was registered as a private company. As the first governing body for auto racing and rallying in India FMSCI started organizing Racing events in India. But as we already know, motorsport is a very cash-intensive business due to the lack of funds at FMSCI. It could not promote motorsports in India to a level that was expected. 

Suppose we compare India with the Middle Eastern countries, in those countries. In that case, national motorsports governing bodies are governed by the government, and with the help of their initiatives and policies motorsports are promoted. Today, the governments of those countries provide massive funding for hosting motorsports in their countries. 

In India, FMSCI was a private company that needed more funds from its beginning due to this reason, till the year 2004, despite motor racing becoming 100 years old in India F1 racing was never conducted. But to fill this void in 2007, discussions started in FMSCI to organize F1 racing for the first time in India, and in  2011, F1 racing was scheduled in Greater Noida. At Buddh International Circuit this track was developed to organize F1 races in India this event proved to be a commercial success in India. But with this event getting successful in India a tax dispute was observed.

Tax Disputation of Motorsport in India

In the years 2012 and 2013, two more additions to F1 racing were organized in India, and after this, F1 racing was never organized in India. The policies of the Indian government were responsible for this till the year 2015, the Indian government did not recognize motorsports as any sport. The Indian government did not consider motorsports as any sport when F1 racing was organized in India for the first time in the year 2011. A tax dispute was observed between the State Government of Uttar Pradesh, Jaypee Group, and the Indian organizers the Government of Uttar Pradesh at that time said that F1 is not considered a sport. It is considered an entertainment activity in India due to this, According to Indian law, It comes under the heavy tax slab of 60%. After this, the owner of Buddh International Circuit, Jaypee Group F1 racing was organized. In this circuit, the government and the Jaypee group tried to solve this problem. However the negotiations did not turn out to be successful the organizers had to pay 60% taxes for the next three years and in the year 2015, the 4th edition of the Grand Prix was supposed to be organized in India. 

But still, the tax disputes were not solved Due to this, F1 racing finally canceled its International contract with the Jaypee Group F1 made an exit from India and never came back and the government of India was responsible for this contract cancellation. The son of the Former FMSCI president, Vicky Chandok, and India's racing driver and MTV host, Karan Chandok said that F1 could never be organized in India until the Indian government funds motorsports. As told earlier, the allotment of funds is very rare because, until 2015, the Indian government did not recognize F1 as any sport. Due to this organizers were forced to pay heavy taxes one more major question arises here, 

Racing is considered to be a sport in the whole world why the Indian government does not recognize racing as a sport? 

Look, there is a simple reason behind this If the Indian government has considered it to be a sport. The Indian government had to support racing as well as any other sports since motorsports are very expensive. This could have laid a burden on the Indian government now, even though it could be a little expensive for the Indian government to consider motorsports as a sport in India at that time. But this has only negatively impacted the Indian government. Let me tell you how according to Karan Chandok the F1 racing event was organized in Istanbul, Turkey in the year 2007. Only 11 people were standing in the grandstand But when F1 was organized for the first time in India in the year 2011, at that time 1,10,000 people were present to watch the F1 racing. 

Will Motorsport be as huge as IPL in India?

This makes it clear that India has a huge motorsports fanbase. However, due to the policies of the Indian government, we could not commercialize the Indian motorsports fanbase. If the Indian government had done it today, Motorsports would have been as successful as the Indian Premier League the Indian government earned INR 200 Crores through the IPL in the year 2010. But today, only the IPL contributes around $ 300 Million to the Indian economy every year apart from this.

Tourism from Motorsport in India

If India hosts international motorsports it would captivate many tourists to India from all over Asia India is a lot cheaper than Malaysia and the Middle Eastern countries. While many tourist destinations are located in India these could be explored by the tourists. This will boost the Indian tourism industry like UAE For example in the financial year 2021-22, Motorsports contributed $ 4.8 Million to the tourism industry of the UAE In the year 2022, The size of the Global motorsports industry had a worth of $ 5.11 Billion And according to many market research firms. By the year 2027, it would increase to $ 12.9 Billion due to this reason, many countries are investing heavily in motorsports, and we again take the example of Saudi Arabia.

Current status of Motorsport in India

In January 2023, the government of Saudi Arabia Offered $20 Million to Liberty Media Corporation who is the current owner of the F1 group to buy the whole F1 group but Liberty Media rejected this offer. Now, If we look at the stance of the Indian government today it seems very positive regarding motorsports Motorsports were provided the status of sports in the year 2015 and FMSCI was included in the sports ministry-backed National Sports Federation of India Former racing driver Akbar Ebrahim who is the present president of FMSCI Believes that this would highly benefit the motorsports in India.

Firstly, conducting any type of championship whether cart, bike, or car racing would become very smooth. Second and most important, the participation of students from various schools and colleges would increase. The students who will be taking part in motorsports would get additional benefits in their schools and Indian colleges would also try to promote motorsports apart from this, if any local federation imports equipment from any foreign country to promote motorsports in India. Subsidies would be provided to them it could be also observed that various state governments are trying to promote motorsports together with the central government of India and taking steps in this direction, the Formula E event was conducted in Hyderabad, Telangana and very soon, MotoGP racing would be organized in India.

Conclusion

But at present, India is at an early stage in terms of motorsports, gradually, the motorsport market is becoming highly competitive in India. That's why we need to take bigger steps now this is not only limited to the Indian motorsports market. This will leave a highly positive impact on the Indian Automobile Industry as well because today Indian auto manufacturers are manufacturing vehicles with global standards and it would become very easy for them to bring their capability and talent in front of the whole world with the motorsports. The Indian auto manufacturers would be able to promote their vehicles easily.