Tesla Car Manufacturing in India Unlikely Despite New EV Policy, Says Minister

Union Minister HD Kumaraswamy confirmed Monday that Tesla car manufacturing in India is unlikely to take shape in the near future, dealing a blow to hopes that the electric vehicle (EV) giant would become a key player in India’s automotive transformation. The statement comes amid the government’s aggressive push to lure global carmakers with a fresh, investor-friendly EV policy.

Speaking at a press briefing, the Minister clarified that Tesla currently appears interested only in setting up showrooms rather than establishing a production footprint in the country. “As of now, Tesla has not shown any concrete plans to begin manufacturing vehicles in India. They are exploring retail avenues, but factory investments seem off the table,” Kumaraswamy noted.

New EV Policy Geared Towards Local Production

Earlier this year, the Indian government introduced a landmark policy titled the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI). With a bold vision to boost Tesla car manufacturing in India and attract other major players, the policy offers significant import tax cuts for automakers committing to local production.

The centerpiece of the policy is a substantial incentive: companies investing at least $486 million (roughly ₹4,000 crore) to build EVs in India can import a limited number of electric cars at a reduced duty of 15%—a stark contrast to the current 70% duty on imported EVs. However, these benefits come with conditions. Approved companies must set up manufacturing plants within three years and comply with strict local sourcing guidelines.

Government officials hope the initiative will energize domestic production, lower prices, reduce dependence on fossil fuels, and create thousands of new jobs. With India aiming to raise EVs to 30% of total car sales by 2030, the stakes couldn’t be higher.

Global Carmakers Eye India, But Tesla Steps Back

While Tesla remains on the sidelines, European giants like Mercedes-Benz and Volkswagen have shown interest in the SPMEPCI scheme. “They are seriously evaluating the Indian opportunity and could be among the early global adopters of the new EV policy,” said Kumaraswamy.

The application window for the scheme is expected to open soon, offering a narrow but valuable entry point for foreign firms ready to invest in India’s green future.

Meanwhile, Tesla’s cautious approach has surprised many industry watchers, given CEO Elon Musk’s long-standing interest in the Indian market. Despite ongoing talks and occasional optimism, Tesla car manufacturing in India has remained elusive, mostly due to high tariffs and regulatory hurdles. Musk has frequently criticized India’s import taxes, calling them “among the highest in the world.”

Local Players Defend the Home Turf

Indian automakers are not standing still. Homegrown giants Tata Motors and Mahindra & Mahindra have already made bold moves, pouring billions into electric vehicle development and establishing a firm lead in the domestic EV space.

These companies have voiced strong reservations against offering tax breaks to foreign rivals, arguing it could undermine years of local investment.

“The new EV policy must not become a backdoor entry for cheap imports,” said an industry expert close to one of the local automakers. “The focus must remain on building in India, not just selling in India.”

India’s EV Market Still in Infancy

Despite significant policy initiatives, India’s EV adoption remains modest. In 2024, out of 4.3 million cars sold, only 110,000 were electric, just 2.5% of the total. Achieving the 2030 target of 30% will require a monumental shift, both in manufacturing capacity and consumer mindset.

The government sees Tesla car manufacturing in India as a potential game-changer in this journey. However, with Tesla hesitant and local companies guarding their turf, the road ahead could be bumpy.

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