Tesla will discover areas in India this month to arrange an electrical car manufacturing unit with an funding of as much as $3 billion, in accordance with a Monetary Instances report, in a lift to Prime Minister Narendra Modi’s plans to bolster home manufacturing.

The plant might be price $2 billion to $3 billion, FT reported on Wednesday, citing two folks with data in regards to the plans.

The EV maker will deal with the states of Maharashtra, Gujarat and Tamil Nadu that have already got automotive hubs, in accordance with the report.

Tesla didn’t instantly reply to CNBC’s request for remark.

India final month lowered import tariffs on sure EVs for automakers prepared to take a position at the least $500 million and begin home manufacturing within the nation inside three years.

“The Authorities of India has accredited a scheme to promote India as a producing vacation spot in order that e-vehicles with the most recent know-how might be manufactured within the nation,” the federal government mentioned final month.

Modi met Tesla CEO Elon Musk in June and invited him to discover funding alternatives in India for electrical autos.

In 2021, India accredited a manufacturing linked incentive scheme for car and auto elements with a price range of 25,938 crore rupees ($3.1 billion) for a interval of 5 years, as a part of the federal government’s efforts to spice up home manufacturing and cut back dependence on imports. The scheme was prolonged by a yr on Jan. 1.

“Tesla is probably the most enticing electrical car maker for India as a consequence of its massive urge for food for funding in world enlargement urge for food and its potential to develop the EV manufacturing ecosystems,” Canalys analyst Ashwin Amberkar mentioned earlier this month.

“The brand new Indian EV coverage presents rising incentives, making it a major alternative for Tesla to determine a robust place within the nation,” mentioned Amberkar.

Tesla is in fierce competitors with China’s BYD, which overtook the U.S. EV large within the fourth quarter of 2023 because the world’s high EV maker, promoting extra battery-powered autos than Tesla. Nevertheless, within the first quarter of 2024, BYD’s gross sales dropped under Tesla’s.

The China EV market accounts for nearly 60% of EV gross sales worldwide. Manufacturers from BYD to Xpeng to Xiaomi have been heating up the market with value wars and new mannequin launches.