Tesla chief Elon Musk will be on a two-day visit to India over the weekend, on April 21 and 22. The billionaire is scheduled to meet Prime Minister Narendra Modi and is also expected to announce some major decisions regarding Tesla and his Starlink internet service.

Senior Tesla executives reportedly held a meeting with the Rajasthan government recently. Rajasthan is the latest in a growing list of states looking to woo Tesla, which is scouting for a location for its India operations.

Reports suggest that Tesla may invest up to $3 billion and set up a factory to manufacture entry-level electric cars locally, for which a team from the US is said to be scouting for potential sites. The entry-level cars speculated to be Model 2, may be priced at around Rs 25 lakh in India.

In March, the government slashed the import tax on some EV models to 15 percent from 100 percent—if a manufacturer invested at least $500 million and set up a factory, giving Tesla an incentive to manufacture locally.

The recent developments have led to some auto ancillary stocks rallying around 5 percent this week, given that an increasing number of Tesla cars are now using components made in India.

According to the Bloomberg supplier list, the company has five-six automotive suppliers, including Samvardhana Motherson International, Suprajit Engineering, Sona BLQ Precision Forgings, Varroc Engineering, and Bosch Ltd.

Additionally, Hindalco Industries, Goodluck India, and Valiant Communication are also part of Tesla´s ecosystem.

Some other suppliers are not part of the Bloomberg list. They include SKF India, which provides automotive and industrial-engineered solutions through bearings, etc. SKF's parent company has worked with Tesla right from the time the carmaker launched its first sports car, in 2008.

Another supplier is Sandhar Technologies, which manufactured two components for the wiper system assembly for the Tesla Model 3. It has since been manufacturing various components for Tesla directly or through technical collaborations.

Currently, more than half of Tesla’s global production takes place in China, and if Tesla decides to start manufacturing in India, it may relocate part of its supplies to India. To this end, Tesla has reportedly been holding talks with auto component suppliers Sandhar Technologies and Bharat Forge, which are already its suppliers.

The EV maker is reportedly sourcing anywhere between $1-2 billion worth of auto parts from India currently. Last September, Union commerce minister Piyush Goyal said that Tesla sourced “nearly $1 billion worth of auto parts from India in 2022, with plans to double it in 2023”.

In a recent media interaction, Goyal had said that Musk does not see India only as a lucrative market, but also as a strategic base from which to serve global markets.

Earlier this week, Tesla signed a strategic deal with Tata Electronics to acquire semiconductor chips for its worldwide operations, said an Economic Times report.

The deal, which was reported to be executed discreetly, shows Tesla is interested in building a supply chain in India that goes beyond local revenue generation. Moneycontrol couldn't independently verify the report.

Rajasthan apart, Gujarat, Tamil Nadu, Maharashtra, and Telangana are also in talks with Tesla for its manufacturing unit. However, nothing has been finalized yet.

Industry experts believe that since the Musk-led company is dependent on the Far East and Western Europe for imports and exports, port access time may play a major role in the company's decision on where to set up shop. And Maharashtra and Tamil Nadu might have a natural advantage on that front.