Bloomberg reported that India is inching closer to shaking hands with Tesla Inc, which would allow the US automaker to ship cars to the country. It is also expected that under this deal, Tesla would set up a factory in India in 2024.

The announcement regarding the deal can be made during the Vibrant Gujarat Global Summit in January 2024, said a source quoted by Bloomberg. Tesla is considering Maharashtra, Tamil Nadu and Gujarat to set up their electric vehicle (EV) factory.

Tesla is also expected to make an initial investment of USD 2 billion to set up shop in India, and would look to increase purchases of auto parts from the nation to as much as USD 15 billion, reported Bloomberg.

Sources have also said that the plans are not finalised yet and could change in the future. Elon Musk’s company is eyeing Maharashtra and Tamil Nadu since they already have well-established ecosystems for electric vehicles and exports. Gujarat is being considered because of the rapid increase in infrastructural development.

Apart from auto parts and shipping EVs, Tesla Inc is also planning to make some batteries in the country to bring down the costs. Tesla currently has factories set up in the US, China and Germany, and the Modi government’s push for increasing EVs in India could lead to a major revenue boost for Elon Musk’s firm.

India’s electric vehicle market still remains low, with battery-powered cars accounting for just 1.3% of the total passenger vehicles sold last year.

While tariffs on importing Tesla vehicles to India can be exceptionally high, the prices could drop down to as low as ₹15 lakh if the vehicles are locally made.