Elon Musk to visit India as govt tweaks FDI rules for space sector as well

23 Apr 2024

Elon Musk to visit India as govt tweaks FDI rules for space sector as well

Elon Musk, CEO of tech enterprises Tesla, SpaceX, Starlink and X, has confirmed his India visit next week after the Indian government notified amendments to foreign investment rules in space sector, allowing 100 per cent FDI in satellite-related ventures.

The finance ministry announcement allowing 100 per cent FDI in satellite-related ventures follows the earlier announcement of a sharp reduction in customs duty on imported electric cars to 15 per cent.

The amended FDI policy allows 100 per cent FDI in the space sector -  74 per cent FDI in satellite manufacturing and operation, including ground segment, under the automatic route, and up to 100 per cent through the government route.

The announcements clear the way for Elon Musk-led electric vehicle manufacturer Tesla and the satellite constellation Starlink to fully exploit the vast Indian market.

Tesla is expected to set up a factory for assembling its EVs that come in CKD form and also enter into deals with Indian entities, including telecom firms, for Starlink connectivity.

Musk will also be meeting with Prime Minister Narendra Modi to ensure that Tesla plans to set up an assembly line for its cars also get government support.

Musk, who also heads space exploration venture SpaceX, will also be meeting with Indian space tech start-ups as part of his moves to expand the presence of SpaceX in India.

Tesla already operates a factory in China’s Shanghai, where it manufactures thousands of cars, both for local sales and for exports. 

It is also likely that Tesla import CKD kits from Shanghai for assembling at its Indian facility, fulfilling Modi’s dream of making India a major global manufacturing hub, at least in part.

The Modi government is aggressively wooing global companies trying to diversify operations away from China amidst rising trade tensions between Beijing and Washington and boost supply chains.

Already, global majors, including Apple phone manufacturer Foxconn, have set up production base in India and are helping to boost the country’s exports.

Modi is also actively promoting semiconductor manufacturing and electric vehicle manufacturing.

For Tesla, which is losing its market with dwindling sales, sees India as a prospective market. Tesla is cutting more than 10 per cent of its global staff of 140,000 in its effort to cut costs and improve productivity.

Besides India, Tesla is also looking at other Asian countries like Thailand for setting up a similar production facility.

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