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Experts said India is emerging as a strong contender to become a top EV investment destination. (File)

New Delhi:

Elon Musk is all set to visit India this month, with a Reuters report indicating that the Tesla chief could announce investment plans to manufacture Electric Vehicles (EVs) in the country. The announcement will be a shot in the arm for New Delhi’s efforts to become a key investment hub for the EV industry.

Experts told NDTV that the West’s efforts to prevent Beijing from flooding the global market with low-priced EVs could provide a fillip to Indian industry.

Nimish Trivedi, CEO and co-founder, Prakriti E-Mobility, said, “With both the US and Europe aiming to curb Chinese EV imports, India is emerging as a strong contender to become a top investment destination. This is fuelled by India’s rapidly growing EV market, projected to account for over 40% of the total automotive market and generate over $100 billion in revenue by 2030.”

According to reports, Mr Musk is also evaluating the possibility of setting up a joint venture with Reliance Industries. The Tesla chief is expected to meet Prime Minister Narendra Modi later this month.

The reports come at a crucial time, days after US Secretary of Treasury Janet Yellen concluded a four-day long visit to China, warning Beijing to scale back its EV production to avoid flooding the market and threatening American companies or face possible import tariffs from Washington.

“China is now simply too large for the rest of the world to absorb this enormous capacity. Actions taken by the PRC (People’s Republic Of China) today can shift world prices. And when the global market is flooded by artificially cheap Chinese products, the viability of American and other foreign firms is put into question,” Ms Yellen had said earlier this week.

Potential US tariffs on Chinese low-priced EVs present a golden opportunity for the Indian EV industry, according to Mr Trivedi.

“With Chinese EVs becoming more expensive globally, American consumers might seek alternatives, opening a door for Indian EV exports to the US and boosting domestic production. Additionally, if Chinese EVs become less competitive overall, Indian EV companies could face less competition at home, leading to higher sales and market share”, Trivedi told NDTV.

The surge in EV consumption across the globe, driven by rising environmental concerns and fuel prices, can further solidify India’s position as an export hub for EVs. This surge in EV adoption is evident in sales figures for both electric two-wheelers and four-wheelers in 2023.

Mr Trivedi explains, “Global trends show a projected 24% increase in EV adoption by 2028. This presents a massive opportunity for India, not just domestically, but also as an export hub. The narrowing cost gap between Chinese and Indian manufacturing, combined with the increasing presence of Indian original equipment manufacturers (OEMs) in key markets like Latin America and Africa, positions India strategically for automotive component exports.”

Impact Of Geopolitical Tensions With China

However, experts said, geopolitical tensions with China could pose a threat to India’s position as an EV hub. The unresolved territorial dispute between the two Asian neighbours and the heavy reliance of American companies on Chinese components could put India in a difficult position, explains China expert Gunjan Singh, Associate Professor at OP Jindal Global University.

“China has previously weaponised the supply of raw materials to pressurise the West. This could put India in a difficult position. However, it is unlikely in this case as the Chinese economy is equally dependent on Western markets for its products” Ms Singh noted.

“The dispute between India and China means the two countries do not essentially trust each other. This means that while India will continue to be an important market for China and will grow in significance due to restrictions on US markets, it does not currently look like an investment hub for the country. Geopolitical tensions between India and China are dissuading Chinese investment in India,” she added.