Tesla plans fully-owned retail outlets in India: Report

Under the single-brand retail route, the company needs to comply with the FDI guidelines including local sourcing norms

Tesla is in talks with the government for setting up fully-owned retail outlets.

The electric carmaker is exploring the single-brand retail route to the Indian market so that it can set up its own retail outlets, according to a Business Standard report.

Under the single-brand retail route, the company needs to comply with the foreign direct investment (FDI) guidelines related to the particular route, including local sourcing norms, to sell directly in India.

Two other foreign majors — Apple and Ikea — have entered the Indian market via this route. While Ikea has started its retail foray in India, the iPhone maker is yet to set up its physical store in the country. Apple has, however, launched its online store for India.

Also Read — Four Tesla models approved by the Centre: What does it mean for the EV maker?

According to the FDI rules, companies with proposals involving over 51 per cent foreign stake in single-brand retail must source 30 per cent of the value of their goods from India. All procurements made in India by the single-brand retailer entity shall be counted towards local sourcing, whether it’s for domestic or overseas sales.

The rule states that a single brand retail trading (SBRT) entity is also permitted to set off sourcing of goods from India for global operations against the mandatory 30 per cent sourcing requirement. For this purpose “sourcing of goods” from India for global operations shall mean value of goods sourced from India for global operations for that single brand (in Rs) in a particular financial year directly by the entity undertaking SBRT or its group companies or indirectly by them through a third party under a legally tenable agreement.

Tesla has been sourcing auto components from the country after signing up non-disclosure agreements, experts told the publication. They added that it is in talks with at least three domestic component manufacturers to increase India sourcing. Under the FDI rules, the company can account the value of third-party deals for meeting its local sourcing norms, irrespective of whether it’s for use in India or exported.

Reacently, the Centre approved four models of Tesla to be imported in the country. It is not yet known which models have received the nod, though they are widely expected to be Model 3 and Y variants.

Even before finalising its plans to come to India, Tesla had been wary of India’s high import costs. Its discussion with the government still continues as the carmaker has been asking the government to cut import duty for electric vehicles.