(Commonwealth_India) Tesla, the globally recognized electric vehicle (EV) manufacturer led by billionaire entrepreneur Elon Musk, has not committed to establishing a manufacturing presence in India, despite the country’s strategic push to become a major hub for electric mobility. According to senior Indian government officials, Tesla’s engagement with policy initiatives designed to attract foreign automakers into the domestic EV manufacturing space has been minimal, with the company showing interest primarily in retail expansion rather than production.
At a recent press briefing in New Delhi, India’s Minister of Heavy Industries, Kumara Swamy, clarified the government’s position regarding Tesla’s involvement. He stated that while Tesla has expressed interest in opening showrooms in India, the company has not demonstrated serious intent to participate in the nation’s EV manufacturing initiative. The minister emphasized that Tesla has yet to actively engage in policy discussions or signal any commitment toward establishing a production facility within the country.
This position emerges at a pivotal moment, as the Indian government finalizes the implementation of the “Scheme to Promote Manufacturing of Electric Cars,” a policy announced in March 2024 aimed at encouraging foreign direct investment in India’s EV sector. The scheme outlines clear performance benchmarks for participating automakers, requiring them to initiate local production within three years of receiving approval. It also mandates that manufacturers achieve at least 25% local sourcing of components by the end of the third year, with the target increasing to 50% by the fifth year. These measures are intended to ensure long-term integration with Indian suppliers and foster a sustainable EV manufacturing ecosystem.
While Tesla’s reputation as a global EV leader has generated significant interest among Indian consumers and policymakers alike, officials have noted that the company’s participation in early consultations on the scheme was limited to a single representative attending the inaugural meeting. Since then, Tesla has not engaged in further rounds of dialogue, raising questions about its strategic intentions in the Indian market. In contrast, several international automakers—including Mercedes-Benz, Hyundai, Kia, and the Volkswagen-Skoda alliance—have indicated strong interest in the initiative, with plans under consideration to meet the program’s investment and localization requirements.
To qualify for the scheme’s incentives, automakers must invest a minimum of ₹4,150 crore (approximately $500 million) and meet phased localization targets. In addition to encouraging local production, the program also offers a significant reduction in import duties to facilitate early market entry. Approved applicants will benefit from a concessional import duty rate of 15% on electric vehicles—substantially lower than the standard rate, which can be as high as 100%. The lower duty rate is intended to provide a transition window during which companies can begin selling vehicles in India while simultaneously developing manufacturing capacity.
Although Tesla has yet to signal interest in participating in local manufacturing, it has taken steps to establish a retail footprint. One of the company’s key moves was securing a lease for a premium showroom space in Mumbai’s Bandra Kurla Complex, a major commercial hub. According to lease documents, Tesla has entered into a five-year agreement for a 4,003-square-foot facility, with operations expected to commence in February 2025. The annual rent for the space is approximately $446,000 for the first year, underscoring the company’s intent to build a brand presence and initiate sales, albeit through imported vehicles.
Tesla’s limited production commitment has also sparked commentary in the United States. Former President Donald Trump, who has remained vocal on trade and economic policy matters, criticized the idea of American companies establishing overseas manufacturing facilities to circumvent domestic tariffs. He specifically mentioned Tesla, stating that if the company were to build a plant in India to avoid U.S. duties, it would be considered “very unfair.” Trump had previously issued similar warnings to Apple during discussions around shifting parts of its supply chain to India amid rising tensions with China. Elon Musk, who advised Trump’s 2024 campaign and reportedly contributed significantly, now faces political scrutiny over his business decisions.
Tesla has long struggled with the high import duties in India. The country imposes some of the world’s steepest tariffs on fully built imported vehicles, often exceeding 100%, which substantially increases retail prices and limits affordability for local buyers. Tesla has argued that these tariffs make it unviable to sell vehicles in India at competitive prices unless there is a reduction in duties or a path to local manufacturing. Recently, the company has taken preliminary steps toward market entry—such as registering a local business entity and posting job openings—but these efforts have largely centered around sales and service rather than production.
A potential turning point was anticipated in April 2024, when Elon Musk was scheduled to visit India, possibly to discuss investment plans with government officials. However, the visit was postponed due to ongoing obligations at Tesla’s global operations. As of June 2025, the company has not issued any updated statements or disclosed a new timeline regarding further involvement in the Indian market.
India, which now ranks as the third-largest automobile market globally, has made EV manufacturing a cornerstone of its industrial policy. The government is aggressively pursuing initiatives to reduce urban air pollution, decrease dependence on imported fossil fuels, and position the country as a regional leader in electric mobility. To that end, it is offering a combination of policy support, fiscal incentives, and infrastructure development to attract international automotive brands.
Tesla’s cautious approach raises important questions about its long-term vision for India. Whether the company’s current posture reflects a temporary delay due to internal priorities or a deeper strategic reluctance remains unclear. What is evident, however, is that while Tesla continues to focus on building a sales presence through imported vehicles, other automakers are moving more decisively to align with India’s manufacturing goals. These firms appear well-positioned to capitalize on the incentives being offered and to make an important contribution to the future of India’s electric vehicle industry.
