NEW DELHI, India: This week, Piyush Goyal, India's commerce minister, said the government will draft a new policy to attract electric vehicle (EV) manufacturers and encourage more investment in the sector.

Goyal's comments came amid ongoing talks between U.S. EV maker Tesla and the government of Prime Minister Narendra Modi on the potential construction of a factory in India.

In August, Reuters reported that India was drafting an EV policy that will cut import taxes for automakers committed to some local production.

Goyal explained that consultations on the new policy will be held with the industry, and the government wants to attract more investment and increase domestic EV production as soon as possible.

"We will come out with a policy. As we get large-scale production, we will start enjoying the fruits of economies of scale of new technologies," he said.

Tesla's senior executives met Goyal in India in August.

Tesla plans to produce a low-cost EV priced at US$24,000, some 25 percent cheaper than its existing entry-level model, for both the Indian market and exports.

Goyal said that having bought $1 billion of components from India last year, Tesla aims to source components worth between $1.7 billion and $1.9 billion this year.