BENGALURU: Tesla is ready to invest up to $2 billion to set up a factory in India if the government cuts import duty on its vehicles to 15% for the first two years of operations, the Economic Times reported on Friday.

Reuters reported in August that India is working on a new EV policy to slash import taxes to as low as 15% - compared to the current 100% on cars priced above $40,000 and 70% for the rest - in exchange for a commitment to some local manufacturing.

The Elon Musk-led electric vehicle (EV) maker is willing to invest up to $500 million if the government approves the reduced duty for 12,000 vehicles and up to $2 billion if the concession is for 30,000 vehicles, the ET report said, citing unnamed sources.

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The government is examining the viability of Tesla’s proposal to invest $2 billion but wants to reduce the number of cars imported on a lower duty, compared to Tesla’s proposal, the Economic Times said.

Tesla, the department for promotion of industry and internal trade, ministry of heavy industries, ministry of road transport & highways and the ministry of finance did not immediately respond to Reuters’ requests for comment.