Indian government officials suggested Tesla – currently discussing setting up a plant in India – partner with local firms to work with any Chinese suppliers the electric carmaker is currently involved with.

What Happened? Officials from Tesla told the Indian government that they’d like some of their Chinese suppliers to establish operations in India to bolster the supply chain.

According to sources speaking to Reuters, Indian authorities proposed that Tesla adopt Apple’s method, which involved gaining approvals for Chinese suppliers through local joint-venture partners. Direct approval for wholly-owned Chinese companies can prove challenging due to the intense scrutiny they’ve faced since the 2020 border disputes in the Galwan Valley.

Why it matters? India’s tense relationship with China, following the 2020 border clashes, complicates Tesla’s plans to utilise crucial Chinese suppliers for parts that India lacks locally. This problem isn’t unique to Tesla; even Tata Motors sources battery cells from China.

In recent months, the Indian government has accepted some joint-venture partnerships between Chinese suppliers and Indian firms on a case-by-case basis. However, they remain cautious about Chinese companies expanding in India, particularly automakers.

Chinese car manufacturer BYD recently dropped a $1 billion (₹8,240 crore) investment plan for electric vehicles in India due to stringent scrutiny.

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