India to Tesla: No Local Content Needed for Plant

India’s government says its “Made in India” initiative to lure more foreign direct investment in the country does not require any local sourcing for manufacturers.

The government clarified its policy in response to concerns by Tesla Inc. CEO Elon Musk, who believed the company would be forced to meet a 30% local content minimum if it decided to build an electric-car factory in India. Musk notes that India lacks a supply base to provide that level of support for the company’s EVs.

But India’s Commerce and Industry Ministry says the 30% local content requirement applies only to wholly owned single-brand retail stores in the country. Manufacturers, the ministry says, are permitted “wholesale of imported goods without sourcing conditions.”

Tesla indicated a year ago that it intends to introduce its upcoming Model 3 electric sedan in India by the end of 2017. The country’s minister of Road, Transport and Highways has urged Tesla to set up a local assembly operation and make India an export hub.