According to sources cited by a credible source, Tesla and Tata Electronics have reached a strategic agreement enabling Tesla to purchase semiconductor chips for its international operations.

This deal, which was quietly completed a few months ago, is significant because, according to the report, it establishes Tata Electronics as a reliable partner for well-known international companies looking to develop an important part of their semiconductor value chain in India.

The value of the sourcing agreement between Tesla and Tata Electronics, among other details, is still unknown.

The worldwide leader in the fastest-growing global atomotive industry, India, is a market that the US-based electric vehicle (EV) company is keen to enter. The man behind Tesla, Elon Musk, is expected to visit India later this month to meet with Prime Minister Narendra Modi. Musk is anticipated to announce possible investments in India during his visit, including pledges to establish EV manufacturing plants. As of right now, Tesla is the most valued car manufacturer in the world.

Neither Tesla nor Tata Electronics, the leader of the Tata group's semiconductor manufacturing endeavor, provided a statement.  Tesla may be interested in partnering with an Indian company to expand its market share in India, according to recent reports. The American electric vehicle manufacturer is allegedly exploring the prospect of forming a joint venture with Reliance to build production facilities domestically, according to allegations that surfaced last week.

Tesla has set aside $2 billion for its next projects in India and has been looking at a number of places, including Gujarat and Maharashtra, for possible plant locations. The goal of the Electric Vehicle (EV) strategy that the Indian government approved last month is to establish India as a global center for EV manufacture. In order to draw in investments from respectable international EV manufacturers, the policy sets a minimum investment of Rs 4,150 crore and no maximum investment amount.

The policy stipulated a three-year timeline for setting up manufacturing facilities in India, starting commercial EV production, and achieving 50% domestic value addition (DVA) within five years at the latest, in addition to the minimum investment requirement of Rs 4,150 crore ($500 million).

Furthermore, as per the policy, the levy on the total amount of EVs that can be imported would be limited to either the investment made or Rs 6,484 crore, which is the equivalent of incentives under the PLI programme, whichever is less. Additionally, it specifies that if the investment reaches a minimum of $800 million, a maximum of 40,000 electric cars (EVs) would be permitted, with an annual limitation of no more than 8,000 vehicles, and that any unused yearly import quotas might be carried over.