No Tesla factory for India—despite a new EV policy slashing import duties. Global rivals show interest, but Musk’s plans remain stuck in neutral.
Tesla is not expected to set up electric vehicle (EV) production in India, a senior government official confirmed on Monday, as the country unveiled a long-awaited policy aimed at boosting local electric vehicle (EV) manufacturing.
According to a Reuters report, Heavy Industries Minister H.D. Kumaraswamy stated that Tesla has shown no current interest in building EVs in India. They are focused on imports rather than local manufacturing, he said, ending months of speculation about the company’s entry strategy into the Indian market.
India’s new EV policy offers significant tax breaks to foreign automakers willing to invest in domestic production. Under the scheme, companies committing at least $500 million towards setting up manufacturing operations will be allowed to import a limited number of EVs at a reduced customs duty of 15 per cent, compared to the existing rate of 70 per cent.
While the policy was initially designed with Tesla in mind, the American automaker appears to be taking a different route. CEO Elon Musk had paused investment discussions last year, citing India’s high import tariffs as a major hurdle.
Despite Tesla’s stance, several major carmakers, including Mercedes-Benz, Hyundai, Kia, and Volkswagen, have expressed interest in exploring manufacturing opportunities under the new scheme.
Skoda Auto Volkswagen India confirmed it is evaluating the policy and its alignment with the company’s long-term plans.
Meanwhile, Indian manufacturers such as Tata Motors and Mahindra & Mahindra, who have made substantial investments in EV production, have previously argued against lowering import taxes. They believe the focus should remain on strengthening the domestic EV ecosystem.
India aims to increase EVs to 30 per cent of total car sales by 2030, up from just 2.5 per cent of 4.3 million vehicles sold in 2024. However, challenges such as limited charging infrastructure continue to slow adoption across the country.
