New Delhi: India's recent reduction in import tariffs on certain electric vehicles has set the stage for Tesla's entry into the market.

According to reports from the UK's Financial Times, Tesla, the renowned electric vehicle manufacturer led by billionaire entrepreneur Elon Musk is set to dispatch a team to India this month to survey potential locations for a proposed electric car manufacturing plant estimated to cost between $2 billion to $3 billion (approximately Rs 16,700 crore-Rs 25,000 crore).

The report says, company is set to dispatch a team from the United States later this month to evaluate potential sites for the manufacturing plant. Focus will be placed on states with  established automotive hubs such as Maharashtra, Gujarat, and Tamil Nadu.

The government has recently offered concessions on import taxes for electric vehicles produced domestically by companies investing a minimum of $500 million (over Rs 4,150 crore) and commencing local manufacturing within three years.

Tesla CEO, has long expressed interest in penetrating the Indian market, with previous attempts thwarted by the Indian government's insistence on a commitment to local manufacturing. Discussions between Tesla officials and Indian government representatives have been ongoing for the past year, including a meeting between Musk and Indian Prime Minister Narendra Modi in June.

In July, last year, Tesla aimed at producing an electric vehicle priced at $24,000, alongside pressing for reduced taxes on higher-priced models intended for the Indian market.

While Tesla's entry into India may signal a major development for the electric vehicle industry, challenges persist, including the need for robust infrastructure and regulatory frameworks to support widespread adoption.

According to the company, it is considering building a smaller car in the proposed new factory than its current models, which would be priced at less than $30,000. It could then sell the model in India and export to south-east Asia, the Gulf, Africa, and southern and eastern Europe.