Tesla, the U.S. auto giant, is on the verge of striking a deal with India to start shipping its electric cars next year and establish a manufacturing plant within two years. The big reveal might happen at the Vibrant Gujarat Global Summit in January. Gujarat, Maharashtra, and Tamil Nadu are the top picks for this venture, thanks to their solid EV and export infrastructure.

Here’s the deal: According to a Bloomberg report Tesla is eyeing an initial investment of around $2 billion for the plant and plans to ramp up its auto parts purchases from India to a whopping $15 billion. The company also wants to start making some batteries locally to cut down costs.

While nothing’s set in stone yet, and plans could still change, Tesla CEO Elon Musk has already hinted at a “significant investment” in India and a planned visit in 2024. This move could be a game-changer for Tesla, allowing it to tap into the world’s most populous nation, where the middle class is increasingly eyeing electric vehicles.

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India’s greater EV vision: Prime Minister Narendra Modi’s government has been pushing hard for more domestic EV production and quicker adoption of cleaner transport. However, India’s EV market hasn’t quite hit its stride yet, with only 1.3% of total passenger vehicles sold last year being battery-powered. High costs and few charging stations are major hurdles.

Currently, Tesla doesn’t import cars directly to India due to steep tariffs. But with local production, prices could drop significantly, potentially to as low as $20,000. Trade Minister Piyush Goyal, who recently visited Tesla’s Fremont plant, noted that Tesla is looking to double its auto parts purchases from India.

After a year-long standoff, Tesla and India resumed talks in May. Musk has been vocal about India’s high import taxes and EV policies, and India has been wary of Tesla selling China-made cars in the country. In a potential win-win, India might lower import taxes for international EV makers for five years, provided they commit to local manufacturing. This could be a major boost for both Tesla and India’s EV ambitions.

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