Electric vehicle heavyweight Tesla isn’t planning to set up a manufacturing base in India any time soon, according to Union Heavy Industries Minister H D Kumaraswamy. Instead, the Elon Musk-led company is looking to open just two showrooms in the country.
Speaking at a media briefing on 3 June, Kumaraswamy said Tesla hasn’t expressed interest in the government’s flagship scheme to promote EV manufacturing, which was widely expected to woo the US-based automaker. “They are going to start two showrooms, they are not interested in manufacturing in India,” the minister said.
While Tesla appears to be steering clear, several global players seem ready to shift gears. Kumaraswamy confirmed that companies like Mercedes-Benz, Hyundai, Kia, and the Volkswagen-Škoda alliance have already shown interest in the production-linked scheme, which was notified in March 2024.
The scheme aims to promote the domestic manufacturing of electric four-wheelers, and is structured to offer major concessions to companies willing to put money and machinery into India’s EV sector. These include a lower Customs duty of 15% for importing up to 8,000 completely built electric cars per year — provided they cost at least $35,000 and the manufacturer commits to invest ₹4,150 crore or more over five years.
The deal comes with conditions. Companies must not only bring in the money but also meet specific local value addition targets. That means they’ll have to produce a good chunk of the EV components locally, aligning with the government's broader 'Make in India' and ‘Aatmanirbhar Bharat’ goals.
To even qualify, companies need to have global revenues above ₹10,000 crore and fixed assets worth at least ₹3,000 crore. In short, only big-ticket players need apply.
When the scheme was first announced last year, it was widely speculated that it had been tailor-made to attract Tesla, which had earlier expressed concerns about India’s high import duties—reportedly reaching up to 110%. Rumours were buzzing about a potential ₹16,000 crore investment from the EV giant, and Musk himself was expected to visit India around that time.
That visit never happened. Musk blamed “very heavy Tesla obligations” for the change of plans. Curiously, he flew to China just days later, India visit cancelled or not
Adding to the confusion, Tesla announced 13 job openings in India earlier this year, including roles like store manager, service advisor, and customer engagement manager. The postings came right after Prime Minister Narendra Modi met Musk in Washington in February.
While it fuelled speculation about a deeper Tesla entry into India, the minister's latest comment has cast doubt on any manufacturing plans.
It’s not just domestic red tape that may have slowed things down. US President Donald Trump had publicly criticised Tesla’s India push, calling it “unfair” to the US.
He said building a factory in India might hurt American interests — a statement he later echoed about Apple’s India plans too.
As Tesla hesitates, Chinese automaker BYD is expanding globally and becoming a serious contender. With global EV sales growth beginning to flatten, India is being seen as a fresh opportunity. But Tesla’s cautious approach may give others room to race ahead in the world’s third-largest automobile market.