Tesla has reportedly signed a deal to procure semiconductor chips for its global operations from Tata Electronics, which is part of one of India’s largest conglomerates, the Tata Group.

According to The Iran Project,The agreement was quietly finalized a few months ago, the Economic Times newspaper reported on Monday, adding that the move aligns with the car maker’s strategy of diversifying its supply chain.

The deal positions Tata Electronics as an important supplier for prominent global clients aiming to establish a crucial segment of their semiconductor value chain in India, the ET claimed. Neither Tata nor Tesla has commented on the development.

The Tata Group’s overall market capitalization exceeded the $365 billion mark in February, with its IT arm, Tata Consultancy Services (TCS), accounting for around half of this. Tata also owns four airlines, including Air India – the national carrier that was privatized in 2022. 

News of the deal comes days before Elon Musk’s planned visit to the country. Last week, the tech billionaire announced plans to visit India on April 21 for a two-day tour, during which he is expected to meet Indian Prime Minister Narendra Modi. He is expected to announce investment in the country worth between $2 billion and $3 billion, as well as launching his Starlink service during the visit, Indian media outlets have reported.
Tesla executives are believed to be scouting locations in India for a multi-billion-dollar plant. Last week, the Hindu Business Line reported that Tesla was in talks with another Indian conglomerate, Reliance Industries, owned by Asia’s richest man Mukesh Ambani, regarding the construction of a manufacturing facility and an allied ecosystem.

Last year, Indian 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 as part of a broader tour of the US. Modi also encouraged Musk to invest more in India when he met him on the sidelines of his US state visit in 2023.

The US car maker’s foray into the world’s most populous nation is being aided by New Delhi’s new policy aimed at attracting foreign manufacturers. India has decided to provide import duty concessions to companies that set up a manufacturing unit with a minimum investment of $500 million.
Prior to the introduction of the policy, imported cars valued at over $40,000 incurred a 100% customs tax, while those under $40,000 faced a 70% import duty. Musk had previously complained about high tariff rates in the country, which he claimed were “the highest in the world.”