×
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT

Elon Musk’s India trip may see breakthroughs for Starlink, Tesla

A sizable investment by Tesla will allow Musk to tap India’s booming electric vehicle market and counter slowing demand for EVs elsewhere — a positive spin for the carmaker when Musk speaks on the crucial earnings call Tuesday.
Last Updated : 20 April 2024, 03:42 IST
Last Updated : 20 April 2024, 03:42 IST

Follow Us :

Comments

By Bruce Einhorn, P R Sanjai and Ragini Saxena

Days after Tesla Inc.’s largest-ever round of layoffs and hours before its quarterly earnings, Elon Musk will fly to India to squeeze in a meeting with Prime Minister Narendra Modi. 

It’s not an idle period for Modi either, who’s criss-crossing states for election rallies days after voting kicked off in the world’s biggest ballot where he’s seeking a third term.

The tight timing of their meeting early next week underscores the high stakes for both men. For Musk, the prize is India’s permission for SpaceX’s Starlink Inc. to operate in what will be by far its biggest market, given China’s resistance to the American company.

For Modi, the appearance of Tesla cars in the streets of Delhi and Mumbai — and a potential investment in manufacturing by the carmaker — will cast him as a leader who’s brought marquee foreign investment to India, modernized its cities into global metropolises, and created jobs. 

“It’s symbolic of the growing foreign investor interest in India,” said Sonal Varma, chief economist for India and Asia ex-Japan at Nomura Holdings Inc. This is “not just due to supply chain diversification from China for export purposes, but also to take advantage of India’s burgeoning domestic demand.”

The trip is likely to yield breakthroughs on both matters. Musk’s willingness to travel to India during Modi’s election campaign — and his relative silence on the Indian government’s censorship of speech on X compared with his pitched criticism of limits enforced by authorities in Brazil — appears to have earned goodwill in Delhi. 

Starlink has already received assurances from India’s government that it will be able to start operating in the country as soon as the third quarter of this year, according to people familiar with the matter who did not want to be identified as the information is not public yet. 

This will end a years-long impasse with the Modi administration and help Starlink close in on two homegrown rivals that secured India licenses for satellite-based internet services last year. 

India’s Ministry of Communications didn’t respond to an email seeking comment. Starlink did not immediately respond to a request for comment.

A sizable investment by Tesla, on the other hand, will allow Musk to tap India’s booming electric vehicle market and counter slowing demand for EVs elsewhere —  a positive spin for the carmaker when Musk speaks on the crucial earnings call Tuesday. Tesla watchers, however, will want to see action on the ground after witnessing delays in previously announced projects such as the massive Mexico plant. 

Tesla has been trying to break into India for years but high import taxes were a deterrent, something Musk has pointed out repeatedly. India last month lowered import taxes on EVs from foreign carmakers that pledge to invest at least 41.5 billion rupees ($497 million) and start EV production from a local factory within three years.

Frosty China

While Starlink’s services are available in the US, much of Europe and Asian countries such as Japan, Malaysia and the Philippines, India and China haven’t approved it.

Despite Tesla being a big investor in China and Musk meeting top officials in Beijing and Shanghai during a visit last May and June, the Chinese government has called the SpaceX service an arm of the Pentagon. 

That’s why winning over India — the only other giant market with a billion-plus population — is especially important for SpaceX.

Starlink operations would also mark a further deepening of the security partnership between India and the US, according to Alex Capri, a research fellow for the Singapore-based Hinrich Foundation. The two countries, along with Japan and Australia, are cooperating in the Quad, a Washington DC-led effort to counter China’s influence.

The US and India “are stepping up surveillance in the Indo-Pacific,” he said. “Starlink definitely has a role in that.”

Checkered Past

The firm, however, has had a checkered past with Modi government.

In 2021, it suffered a setback when the Indian government asked Starlink to stop selling subscriptions to the public before it had even applied for a license. The administration also asked it to refund the subscription fees collected from customers.

Since then, Musk’s space business in India has been in limbo, stymied in part by a requirement that providers of telecom services have some local ownership. Musk has resisted similar rules in countries such as South Africa and Taiwan.

The first signs of a thaw came when Modi’s government introduced last year a bill that proposed to eliminate auctions for allocating spectrum to companies that offer satellite internet services. It was a favorable outcome for Starlink and OneWeb, which told the country’s telecom regulator they are against bidding for satellite airwaves.

Satellite broadband services are “also aligned to India’s digital focus” and could enable better delivery of government programs, Nomura’s Varma said.

Easing Rules

India in February eased foreign direct investment rules for the space sector allowing companies to invest in manufacturers of satellites and rockets without requiring government approvals.

Starlink will still need to resolve issues related to security approvals, spectrum allocation and pricing plans before it starts operating in India. Once it does, Mukesh Ambani-controlled Reliance Jio Infocomm Ltd. and Sunil Mittal-backed OneWeb will have trouble competing, according to Gareth Owen, a UK-based associate director at Counterpoint Research. OneWeb is a subsidiary of Eutelsat Communications SACA.

The SpaceX unit has more than 5,600 active satellites in low-Earth orbit, with plans to launch tens of thousands more, as it aims to rival telecom providers that use larger and higher orbit satellites that hover over one location.

“Starlink has a major advantage,” Owen said. “It has the largest constellation of LEO satellites deployed in orbit, covering most of the regions, and offering connectivity services across the globe.”

ADVERTISEMENT
Published 20 April 2024, 03:42 IST

Follow us on :

Follow Us

ADVERTISEMENT
ADVERTISEMENT