Tesla has reportedly inked a deal with Tata Electronics to procure semiconductor chips for its global operations, media reports emerged on Monday citing sources. 


The Economic Times cited sources in the know and reported that the deal was officially signed a few months earlier. This agreement reflects Tesla’s eagerness to enter the Indian automotive market, reportedly the fastest-expanding in the world. 


The deal will place Tata Electronics as a trustworthy supplier for major clients overseas looking to set up a segment of their semiconductor value chain in India. Reportedly, CEO Elon Musk is scheduled to visit India this month and meet with Prime Minister Narendra Modi. Musk is expected to commit funds to set up EV manufacturing facilities in India, along with other possible investments in the country. 


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The report noted that it didn’t receive any comment on the news from Tesla or Tata Electronics. The value of the deal along with other details have also not been disclosed yet. Commenting on the potential deal, Ashok Chandak, President, India Electronics and Semiconductor Association (IESA), said that the major point of concern remained the sourcing of semiconductors. Chandak urged for an improvement in the supply chain to capture the higher value addition industrial and automotive segments. 


The report further said that according to experts’ estimates, Tesla is expected to invest about $2-3 billion in India to manufacture electric cars. Notably, the recent policy changes have tried to promote the usage of EVs as automakers can now import EVs priced $35,000 or higher at a lower import duty of 15 per cent.


Officials close to the matter also said that Tata Electronics has made major investments in indigenous technology development to help drive this project ahead. Further, the Tata Group firm has also put together a highly experienced team to oversee the developments, the report noted.


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