Modi and Musk: A Closer Look at Their Business Relationship

This report is from CNBC's "Inside India," which provides current and informative news and market analysis on India's rapid growth and the major corporations driving it. If you enjoy it, you can subscribe here.

The big story

Tesla CEO Elon Musk is scheduled to meet Indian Prime Minister Narendra Modi soon, and the timing couldn't be more opportune. For both parties, the visit holds significance. India is preparing for a general election that will take place over the next month and a half. The ruling party, BJP, is expected to win and has promised to attract foreign investment and stimulate economic growth. The manufacturing sector is a key focus in their manifesto, which was released earlier this week. Given that the incumbent wants to showcase Musk's presence in India, it's no surprise that the Tesla CEO is visiting. With over 140,000 employees worldwide and producing one of the most advanced cars in the world, Musk's visit to India is a significant move. For Musk, the battered stock and the global slowdown in auto sales are clear motivators for his trip to India. Any news that the world's largest EV maker is entering the third-largest auto market would be welcomed by investors.

India has lowered the barrier to entry for foreign automakers by cutting import tariffs on foreign cars from 100% to 15% for vehicles above $35,000. This move is aimed at attracting Tesla, and automakers must invest $500 million in three years to manufacture vehicles locally. However, there are risks associated with this policy, such as the possibility of a surprise in the electoral results. EV sales made up only 2% of the 4.1 million cars sold in India in 2023, while a similar number of vehicles are sold in China every two or three months, with EVs making up nearly a third of those volumes. Tesla will face competition on cost, as around 70% of India's auto market is dominated by Tata Motors, which sells cars for between $10,000 and $20,000. Even Tesla's rumored cheaper Model 2, which is expected to be manufactured in India, will cost more than this. Despite this, demand for EVs is slowing, and Tesla has cut around 14,000 jobs globally to reduce costs as marg

What happened in the markets?

Despite a 2.4% decline in the past week, the Indian stock market indexes Sensex and Nifty 50 have still managed to gain 0.34% and 1.22% respectively this year.

This week, the 10-year Indian government bond yield has increased to 7.18%, in line with global bond markets. The Indian currency has weakened against the greenback, with one dollar now exchanging for 83.54 rupees. For equity investors, the iShares MSCI India ETF has underperformed the iShares All Country World Index ETF, losing 2.3% this week, despite being up by 4.75% year-to-date.

This week on Biz Focus Hub, Harsh Modi from JPMorgan discussed the banking sector in India and stated that their asset quality is among the cleanest in the Asia-Pacific region.

Alexander Cousley of Russell Investments argued that the China market is preferable over the India market on a valuation basis, while Bhaskar Laxminaryan of Julius Baer contended that the India market is still in its early stages.

What else happened?

The largest democratic election in the world is taking place in India, with voting commencing on Friday and concluding in seven phases over the next six weeks. The people of India will determine who will occupy the seats of the Lok Sabha, the lower house of Parliament, for the next five years.

The International Monetary Fund has raised its growth prediction for India this year by 0.3 percentage points, bringing it to 6.8%. This increase is due to the country's strong domestic demand and growing working-age population, according to the IMF.

The cost of riding on India's luxury trains may be unexpected. Our travel team has uncovered the pricing for these trains, which combine historical sophistication with contemporary comforts. These trains were created to boost tourism in the country and offer travelers a lavish way to explore India.

A recent LinkedIn list revealed the top 5 companies in India that prioritize employee experience and growth. Tata Consultancy Services topped the list, but here is the complete ranking.

What's happening next week?

Vodafone Idea will have an FPO in addition to the election, which is a public offering that follows an IPO. This FPO allows the company to raise more funds to expand its services. It will be open from Thursday to Monday, with the listing taking place on April 25.