Union Transport Minister Nitin Gadkari has said that India is willing to offer incentives to car manufacturer Tesla so that their cost of production would be less than that in China, Reuters reported on Tuesday. However, Gadkari mentioned a caveat that Tesla should make cars in India, and not just assemble them.

“Rather than assembling [the cars] in India, they should make the entire product in the country by hiring local vendors,” Gadkari said, in an interview to Reuters. “Then we can give higher concessions.”

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“The government will make sure the production cost for Tesla will be the lowest when compared with the world, even China, when they start manufacturing their cars in India,” the minister added.

Last year, Gadkari had said that that the Elon Musk-led company would start operations in India in early 2021. Back then, however, he had said that Tesla will first begin sales operations in India and then might look at assembly and manufacturing based on the response. His comment had come two months after Musk, in a tweet, had said that his company will begin operations in India in 2021 “for sure”.

Then in January, Tesla registered its Indian arm in Bengaluru, under the name Tesla India Motors and Energy Pvt Ltd.

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In his pitch for Tesla beginning production in India, Gadkari told Reuters that it was a “win-win situation” for the company as the country was making about 80% of components for lithium-ion batteries locally, besides being a big market.

The minister said that he also wanted to engage with Tesla about building an ultra high-speed hyperloop between Delhi and Mumbai.

However, China, where Tesla already has a manufacturing unit, has a much bigger market for electric vehicles than India. In 2020, electric vehicles accounted for just 5,000 out of a total 24 lakh cars sold in India, according to Reuters. In comparison, China sold 12.5 lakh electric vehicles, of the total sale of 2 crore cars.