India, US addressing Pannun controversy; Tesla awaits EV policy for entry: Mukesh Aghi

India, US addressing Pannun controversy; Tesla awaits EV policy for entry: Mukesh Aghi

India and the United States (US) have sandboxed the controversy around the alleged plot to assassinate Khalistan separatist Gurpatwant Singh Pannun as both countries are geopolitically aligned — with most US firms such as Apple Inc looking at India to de-risk their supply chain, Mukesh Aghi, President and Chief Executive Officer of the US-India Strategic Partnership Forum told Divya A and Ravi Dutta Mishra.

On the much anticipated electric vehicle (EV) major Tesla’s entry into India, Aghi, who was in India briefly to participate in the Vibrant Gujarat Summit recently, said that there is no discussion on the same as Tesla is awaiting India’s EV policy and that the company’s entry would involve a strong chip manufacturing ecosystem and not just a battery ecosystem. Edited excerpts:

How has the Pannun incident impacted the India-US economic relationship?

There are multiple factors driving the India-US relationship. The Pannun incident is isolated and it has been sandboxed. It has been sandboxed because there is enough maturity on both sides. There is a sense that an incident like that should not derail the broader relationship.

You have what is called a geopolitical alignment. The US companies want to secure the supply chain. That is driving the relationship. The access to each other’s market is critical. Another factor is the five million Indian American population in the US. They comprise 1.5 per cent of the population but generate about six per cent of the gross domestic product. So they are affluent and are deeply engaged in political appointments too.

Has there been concrete discussion on Tesla’s entry into India?

There hasn’t been a discussion on Tesla. Tesla is waiting for government policy to come. But we have to look at Tesla not just purely from the EV perspective but from the perspective of how it can build an ecosystem for chip manufacturing.

A Tesla car requires around 2,000 chips. And if they plan to have a production facility to manufacture five lakh cars, think about the ecosystem. Tesla’s storage technology is world-class. So once the government policy gets streamlined, Tesla may come in. But there is no discussion at the moment.

Do you think the US will restore Generalised System of Preferences (GSP) status to India?

A congressional act can restore GSP but it is an election year and the administration will not push for anything that may upset unions and people who are against these things. The US has a tremendous trade deficit. So, my thinking is that this year it will be very difficult to get GSP restored.

How are investor sentiments given it’s an election year for both the US and India?

The state elections (in India) took place and it sent a message to the global investor community that there will be political stability going forward. So, at least the global investors are pricing in their thinking that this government will come back again.

There are a number of factors that are driving sentiments. Primarily, geopolitics. The aggressive positioning of China is a big factor. Every boardroom in the US is asking what is your China-plus-one strategy? Apple Inc is a great example. Next year we expect them to do 25 per cent of iPhone 16 manufacturing in India. So if a world class company is succeeding in India, they’re sending a message to other companies to move production in India.

Are the US and India looking to mutually eliminate non-tariff barriers?

Both countries are looking to bring down non-tariffs barriers. India has done that (imposed barriers such as quality control orders) because of the China factor. And India and the US will find a solution. But the message to the US companies is that you cannot bring all the components from China. If you look at EV too, one of the conditions that have been put is that you can’t bring cars from China at lower duty and sell them here.

Visa has been a concern. Is it a political problem like in the United Kingdom?

It is not a political issue in the US. The US has already issued record number of visas to Indians. Generally their constraint was lack of staff (at embassy) during Covid-19.

Today, we have around 272,000 Indian students in the US. Our objective is to take it to 500,000. We have been putting in a lot of requests to improve the staff. They have got temporary staff too.

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