Guwahati: The Elon Musk-owned electric vehicle (EV) giant Tesla is setting to stage to purchase a large bulk of semiconductor supplies from Tata Electronics.

The development was first reported by The Economic Times and has neither been confirmed nor denied by either entity. However, it surfaced at a time when Tesla is eyeing locations to set up its first billion-dollar plant in India. Moreover, Musk is planning a visit to India later this month. The Tesla CEO is expected to meet Prime Minister Narendra Modi and announce several major projects in India.

So how is Tesla's India foray connected to Assam?

Although Musk is unlikely to set up his plant here – he is said to be eyeing states with already-existing automobile manufacturing capabilities. According to media, locations close to ports will be preferred.

However, Tata Electronics is setting up the Tata OSAT facility with an outlay of Rs 27,000 crore in the outskirts of Guwahati. Last month, Tata Sons chairman Natarajan Chandrasekaran said the group hopes to start semiconductor chip production at its two new plants – one in Assam and one in Gujarat - by 2026.

“I am very glad that Tata Group has been able to establish the first semiconductor fab and also the first indigenous assembly unit in Assam”, Chandrasekaran said. “Assam will see a lot of prosperity and a lot of jobs and will change the face of that part of the world with this specific investment.”

According to a report in Fortune, Tata Electronics is planning to scale up its operations with $10 billion in investments by 2027 to become a key player in the global supply chain. Tesla is also believed to be in talks with another Indian conglomerate, Reliance Industries, owned by Asia’s richest man Mukesh Ambani, regarding constructing a manufacturing facility and an allied ecosystem.

Tesla's engagement with local suppliers indicates a strategic diversification strategy, moving beyond reliance on single markets. Last year, Commerce and Industry Minister Piyush Goyal claimed that Tesla was “on its way to double its components imports from India”, following a visit to its factory in Fremont, California, as part of a broader tour of the US. 

Tesla’s pivot towards India also aligns with recent policy revisions facilitating easier imports of EVs valued at $35,000 or above, subject to reduced import duties, provided carmakers commit to investments worth at least $500 million.

Musk’s upcoming plant in India is believed to be worth at least $2-3 billion.

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