Union Minister H.D. Kumaraswamy stated that Tesla is unlikely to start manufacturing cars in India anytime soon. Currently, Tesla seems focused mainly on opening showrooms rather than local production.
India’s New EV Policy: A Big Push for Local Manufacturing
India, the world’s third-largest car market, recently rolled out a new electric vehicle policy aimed at attracting global automakers to manufacture EVs domestically.
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The key incentive:Automakers investing at least $486 million (~Rs 4,000 crore) in India and starting production within 3 years get a lower import tax of 15% on a limited number of imported EVs.
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Current import duty on electric cars is as high as 70%, making foreign EVs expensive.
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Companies must also meet local sourcing requirements to qualify.
The government’s goal is to ramp up local EV production, generate jobs, and make EVs more affordable for Indian consumers.
Global Interest & Domestic Response
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Mercedes-Benz and Volkswagen are reportedly interested and evaluating opportunities under this new scheme (called SPMEPCI). The government plans to open applications soon.
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Meanwhile, Indian EV leaders Tata Motors and Mahindra & Mahindra have already invested heavily and dominate the domestic EV market. They oppose drastic duty cuts for imports, fearing it may hurt local manufacturing.
EV Market Snapshot & Targets
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EVs currently make up just 2.5% of India’s total car sales.
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In 2024, out of 4.3 million cars sold, only about 110,000 were electric.
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The government aims to increase EVs’ share to 30% by 2030, reducing pollution and fossil fuel dependency.
Tesla’s Position
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Tesla has been interested in India for years but high import taxes have been a major barrier. Elon Musk has publicly criticized India’s duties as among the highest globally.
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Despite the new policy offering lower import duties for manufacturers setting up locally, Tesla appears reluctant to invest in Indian manufacturing at this time.
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Tesla might focus on selling imported cars via showrooms, which could limit competitiveness on price against local players like Tata and Mahindra.
What to Watch Next?
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The spotlight will be on Mercedes-Benz and Volkswagen to see if they make concrete moves to set up local EV production.
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India’s EV market development depends heavily on how these foreign automakers respond and how Indian manufacturers ramp up their offerings.
In short, while India is aggressively pushing local EV manufacturing, Tesla’s entry as a manufacturer is unlikely soon, leaving room for other global and domestic players to lead the transition.
