According to Union Heavy Industries Minister H.D. Kumaraswamy, Tesla Inc. has decided not to establish manufacturing operations in India, focusing instead on importing its electric vehicles (EVs) into the country. This decision comes despite the Indian government’s recent introduction of a new EV policy to attract foreign investment through significant import tax reductions for companies committing to local production.
Under the new policy, foreign automakers investing a minimum of $486 million (approximately ₹4,150 crore) in setting up EV manufacturing facilities in India are permitted to import a limited number of electric vehicles at a reduced import duty of 15%, down from the current 70%. These companies are required to commence production within three years of approval and meet specific local content requirements
Minister Kumaraswamy stated, “Tesla is not interested in manufacturing in India; they are only looking to open showrooms and sell imported cars.”
While Tesla has finalized showroom spaces in major cities like Mumbai and New Delhi, and has begun recruiting staff, it has not committed to local manufacturing. This stance contrasts with other global automakers such as Mercedes-Benz, Volkswagen, Hyundai, and Kia, which have expressed interest in India’s new EV policy and are exploring opportunities to establish manufacturing operations in the country.
India, currently the world’s third-largest car market, aims to increase the share of electric vehicles to 30% of total car sales by 2030, up from 2.5% in 2024. The government’s new policy is a strategic move to boost local EV production, reduce reliance on imports, and promote sustainable transportation
Domestic automakers like Tata Motors and Mahindra & Mahindra, who have heavily invested in local EV manufacturing, have raised concerns about the import duty reductions, arguing that they could undermine the competitiveness of homegrown companies.
The application window for the new EV policy is expected to open in the coming weeks, with the government inviting proposals from interested companies. Despite Tesla’s current position, the Indian government remains optimistic about attracting significant foreign investment to bolster its EV manufacturing sector.
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