India will develop new policy to attract electric vehicle (EV) manufacturers and encourage greater investment in the sector, the commerce minister has said.

According to Reuters, Piyush Goyal’s comments came as Tesla continued talks with Narendra Modi’s administration on the possibility of building a factory in India.

Reuters had, citing sources, last month reported India was working on EV policy which would cut import taxes for automakers committed to some local manufacturing.

Asked about the government’s plans, Goyal said consultation on the new policy would be held with the industry.

“We will come out with a policy,” he said, adding the government wanted to attract more investment and increased domestic EV production as soon as possible.

“As we get large scale production, we will start enjoying the fruits of economies of scale of new technologies,” Goyal said without disclosing the nature of any possible incentives.

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Tesla’s senior executives with an interest in building a factory in India met Goyal in August.

Tesla plans to produce a low-cost EV priced at $24,000 – about 25% cheaper than its existing entry-level model – for both the Indian market and export.

Goyal had said earier Tesla aimed to source components worth between US$1.7bn and $1.9bn from India this year, having bought $1bn of components last year.