A week ago, residents of Bengaluru celebrated the announcement of Tesla registering its corporate office in the state, confirming its first move into India. Tesla is reported to be in talks with five state governments, including Andhra Pradesh, Tamil Nadu and Maharashtra to set up operations in the country. In the first signal of its intent, the Palo Alto-based company registered its corporate office in Bengaluru.
Gaurav Gupta, Additional Chief Secretary, Commerce and Industries in Karnataka said Tesla’s decision followed months of correspondence between the state government and the electric car manufacturer. “It did not happen by chance nor did it fall into our laps. We worked hard behind the scenes and were in touch with the company for over four months. We responded to them with the information they asked for. I am certain other states also corresponded with them but it was up to the company to decide what its strategic interest was,” he said.
According to Gaurav, who is one of the officials involved in the discussions, there were a number of factors that worked in Bengaluru’s favour.
“Bengaluru is a technology hub and a place for innovation, not only for electric vehicles but also in the field of space because of the presence of Indian Space Research Organisation (ISRO). Besides this, we have a number of startups, a talent pool and a consumer market of people who have lived abroad and returned. This is also the place with the highest number of electric vehicles among cities in India. The state is also where the first electric vehicle policy in the country was announced in 2017,” says Gaurav Gupta.
Companies such as Bosch, Mahindra Electric, Ather and Ola Electric currently operate in the electric vehicle mobility space in Bengaluru. "It was a group effort with many officers involved in making this happen," he added.
Tesla’s decision to register a corporate office in Bengaluru comes at a time the Karnataka government has battled a series of challenges, and has been trying to maintain its industry-friendly image.
In December 2020, thousands of workers at an iPhone manufacturing plant in Kolar district vandalised the plant in anger over unpaid dues and delayed payments. The company — Wistron Corp — based in Taiwan admitted to lapses and apologised for the incident.
In another instance, a lockout at a Toyota Kirloskar Motors plant in Ramanagar ended last week, nearly two months after the workers union alleged that the company wanted to raise the number of cars produced in a day from 300 to 360 without any increase in manpower or timings. The employees’ strike continues, with workers stating that their grievances have not been addressed.
Gaurav sought to play down the impact of the two cases. “It is a simplistic view that the Toyota and Wistron cases are connected like a string of pearls that goes together to say Karnataka is a bad place for companies. In the Toyota issue, the employees were paid and it was a small matter where certain people did not want to conform to the requirements placed by the company. It should have been settled across the table but it wasn't to be,” he said.
“Wistron was another issue that ramped up quickly. Overtime systems were faulty, payments were not made in time even though people were working for 12 hours and the company has acknowledged these lapses. These are intensely local issues and do not affect the city which has great potential for investment and is one of the largest technology clusters in the world. Our competition is not just with other states in India but also with cities like Singapore and Manila because ours is a city with a million technology professionals,” he explained.
Now, Tesla's expected entry has sparked a sense of optimism about the company venturing into sales and research in Bengaluru. In December, India’s transport minister Nitin Gadkari had said that Tesla would start with sales early this year and then might look at assembly and manufacturing after entering the country.
However, officials in Karnataka say that this timeframe is still being discussed with Tesla. “It is a positive step but it is also a small step in the journey into the future. We are still in talks with them about what comes next and it is left to their judgement and discretion. I am trying to paint a picture of the reality of the process involved before we get to R&D and manufacturing. Any company will wait till there is critical mass before stepping into manufacturing," he added.
"What we can say is the future is exciting because Bengaluru has a lot of startups in the solar, electric vehicle and satellite design field and with Tesla coming in, it can also work with the startups here and improve the ecosystem,” he said.