India (Commonwealth) _The commerce minister announced on Wednesday that India will develop new policies to attract electric vehicle (EV) manufacturers and encourage greater investment in the sector.

Piyush Goyal’s remarks come as Tesla continues negotiations with Narendra Modi’s administration about the prospect of establishing a manufacturing in India.

India is working on an EV strategy that will reduce import taxes for automakers that commit to some local manufacturing, citing sources with direct knowledge of the situation.

When asked about the government’s plans, Goyal stated that the industry will be consulted on the new regulation. “We will come out with a policy,” he added, adding that the government wants to attract more investment and enhance domestic EV production as quickly as possible.

As we achieve large-scale production, we will begin to reap the benefits of new technology economies of scale, Goyal added, without elaborating on the nature of any potential incentives. Tesla executives interested in establishing a manufacturing in India met with Goyal in August.

Tesla intends to build a low-cost EV for $24,000 – around 25% less than its current entry-level model – for both the Indian market and export. Goyal stated on Tuesday that Tesla intends to source components worth $1.7 billion to $1.9 billion from India this year, after purchasing $1 billion in components last year.

According to industry group Chairperson Sunjay Kapur, the turnover of India’s auto component business is forecast to expand by double digits in the current fiscal year, approaching the $100 billion level. According to figures from the Automotive Component Manufacturers Association of India, turnover increased by one-third to its highest level ever of $70 billion in the previous fiscal year.

Despite recessionary trends in Europe and the United States, which are significant export destinations for the car components business, Kapur said in a statement on Monday. The strong resurgence in domestic vehicle sales has also resulted in a dramatic increase in imports, resulting in a trade imbalance this year.

Engine components, body, chassis, suspension and brakes, drive transmission and steering, and electricals and electronics topped EV sales in the previous fiscal year. The United States was the industry’s largest export market, accounting for 32% of total exports. Asia was the primary source of imports into the country, accounting for two-thirds of total figures. China remained the biggest country, accounting for 30% of all imports into India.

The passenger vehicle market accounted for 44% of sales to vehicle manufacturers, followed by commercial vehicles (24%), and two-wheelers (18%). The domestic passenger vehicle industry is likely to rise by 5-7% this fiscal year, after recording the highest-ever sales of 38.9 lakh in FY23, propelling it to the third largest market internationally.

The automobile business is booming. The automotive component sector reached an all-time high turnover of about $70 billion (Rs 5.6 lakh crore) in FY22-23, representing a 33% year-on-year increase. According to the most recent data from the industry’s top body, the Automotive Component Manufacturers Association of India (ACMA), this has surpassed the previous best performance of Rs 4.2 lakh crore in FY21-22.

India’s population has apparently exceeded China’s, reaching 1.4 billion people.It is now the world’s most populous country. With a demographic advantage of approximately 26% of the population aged 15-29 years and another 26% aged 0-14 years, India is positioned to become the largest worldwide market for a tech-savvy young population.

Electric vehicle sales in India are increasing month after month, but if more quantitative evidence of the growing consumer shift to electric mobility in India is needed, it will be provided on August 10, 2023 in the form of Union Transport Minister Nitin Gadkari’s written reply in the Lok Sabha. According to data released by the Union Minister and derived from the government’s Vahan website, there are over 2.8 million registered electric vehicles (EVs) on Indian roads as of August 8, 2023 – 28, 30,565 units.