The arrival of the popular electric vehicles manufacturer Tesla is being highly anticipated in the Indian market but the company has to pass a few challenges before that becomes a reality. The EV maker has been progressing in that direction and has days after its appeal, the Indian government is reportedly considering slashing import duty on EVs.

Now, a new report coming from Counterpoint Research hints at Tesla aiming to give a bigger role to India. It claims that Tesla could announce the production of its cars in India as early as next year.

Earlier this year, India’s Transport Minister Nitin Gadkari had said that the country is ready to offer incentives to ensure that Tesla’s cost of production would be less than in China if the carmaker commits to making its electric vehicles in India.

To attract EV makers, India is considering slashing its import duty. For electric vehicles with a valuation of less than $40,000, the tax rate can be slashed to 40 percent compared to 60 percent currently. For cars that are valued at over $40,000, the rate could be slashed from 100 percent to 60 percent.

It is believed that the Indian government is in favor of cutting import duties to see companies like Tesla providing benefits to the domestic economy by manufacturing locally later on, or give a firm timeline on when it would be able to.

India is currently the fifth largest car market with an annual sale of around 3 million cars but last year, EVs accounted for only 5,000 of them. This is because of the negligible charging infrastructure and the high cost of electric vehicles. Also, India doesn’t have a comprehensive EV policy like China, the world’s biggest auto market.

Tesla is expected to enter the Indian car market and gauge the demand by first importing vehicles instead of manufacturing them locally. Currently, the company has active production facilities in California, Nevada, New York, and Shanghai with three more factories to start operation pretty soon.

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