ELON Musk's Tesla has opened discussions with the Indian government to set up a car factory in the country to make as many as 500,000 electric vehicles with prices beginning from INR2 million (US$2,438), reports The Times of India.

The company - which has a significant presence in China, including factories - is also looking at using India as an export base as it plans to ship cars to countries in the Indo-Pacific region, say government sources.

"Tesla has come to us with an ambitious plan, and we are confident that the movement will be positive this time around, especially as it involves both local manufacturing and exports," a source said.

The Commerce and Industry Ministry is leading the talks and the government is hoping to put together a "good deal" while maintaining a level-playing field.

A questionnaire sent to the company's headquarters in the US remained unanswered at the time of going to press.