They are scheduled to meet officials at Invest India and Niti Aayog on Tuesday.
“Porsche is examining possibilities to locally assemble the SUV (Cayenne) to avail of tax benefits and expand its footprint in this fast-growing space,” a senior executive in know said on condition of anonymity.
The company’s sales in India grew 64% on year to 779 units in 2022 with Cayenne accounting for almost half of it, the person said.
Porsche did not share any information on the development in response to a query from ET.India recently surpassed Japan to become the third largest automobile market in the world.The country imposes 100% import duty on cars with cost, insurance and freight value of more than $40,000 and 70% on cheaper vehicles. Customs duties on knocked down auto parts, which are then locally assembled in the country, are substantially lower at 15-35%.Porsche currently manufacturers vehicles in Germany and in Slovakia.
The company’s first assembly facility outside of Europe will open shortly in Malaysia, where Cayenne will be produced for the local market only. India could join the ranks if discussion with the government progress favourably.
Porsche currently sells a range of imported cars like Macan, Cayanne and Panamera priced between Rs 88 lakh and Rs 1.84 crore ex-showroom in India.
“The government is keen that carmakers manufacture vehicles indigenously rather than bring in imported models for sale from neighbouring countries,” a second industry executive said. “They are against lowering import duties as it stands to impact adversely local jobs and investments. Carmakers are aligning strategies accordingly to tap into the massive potential the market here offers.”
American electric carmaker Tesla – which had earlier urged the government for a cut in import duties to start operations in the country – recently tweaked its plans to enter India. CEO Elon Musk in June said the company was looking to invest “as soon as humanly possible”. The location for a factory could be finalised by the end of the year, according to reports. Tesla currently has two manufacturing facilities outside the US – near Berlin and in Shanghai.
The increased focus on India comes at a time when its economy is projected to grow at a healthy pace even as several advanced economies including the US, Germany and the UK are beset with recessionary risks. The International Monetary Fund last month raised India’s GDP growth forecast for this fiscal year to 6.1%. In comparison, the US is expected to grow 1.8% and the UK by 0.4%, while the German economy is projected to contract by 0.3%.
To be sure, sales of luxury vehicles in India are limited, with around 38,000 units sold in the segment in 2022. However, volumes are growing on a fast clip and are estimated to top 100,000 units in the next 10 years.
As per a report by property consultant Knight Frank, India ranks sixth in the pace of growth in the number of self-made people with net assets worth $30 million or more and are under the age of 40 years — a key customer segment for luxury products including vehicles.
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