Union Minister for Heavy Industries HD Kumaraswamy on Monday clarified that Tesla has shown no interest in setting up a manufacturing facility in India, opting instead to open showrooms in the country.
“Tesla is not interested in manufacturing here. They are only planning to start showrooms,” Kumaraswamy told reporters, suggesting that the much-anticipated entry of the Elon Musk-owned electric vehicle giant may be limited to retail operations for now.
Heavy Industries Secretary Kamran Rizvi echoed the sentiment, noting that Tesla’s intent remains uncertain. “We will know the real intent when we open the application. What the minister said is based on informal interactions,” Rizvi explained.
In contrast, the minister noted that several European automobile giants have expressed strong interest in setting up EV manufacturing plants in India under the country’s new EV policy. Companies such as Hyundai, Mercedes-Benz, Skoda, and Kia are among those reportedly evaluating investments.
One of the advantages cited by European firms is India’s left-hand drive system, which aligns with their existing vehicle configurations. This compatibility reduces the need for extensive design changes when exporting vehicles from India. In contrast, U.S. companies like Tesla face challenges due to the right-hand drive format prevalent in their domestic market.
India’s EV policy, introduced in 2022, offers significant incentives to attract global EV makers. Companies that invest $500 million or more in domestic manufacturing can avail an import duty reduction to 15%. Additional conditions include:
- Local sourcing of 25% of components within the first three years
- An increase to 50% local sourcing by the end of five years
- The ability to import up to 8,000 EVs annually at the reduced duty rate
Tesla’s interest in India had spiked after this policy announcement, and CEO Elon Musk had previously hinted at plans to invest. However, India’s high import duties have long been a sticking point for Tesla, and the recent clarification suggests that manufacturing plans remain off the table—for now.
While Tesla may still explore sales operations, it is the European automakers that appear more aligned with India’s Make in India initiative, aiming to capitalize on both domestic demand and export potential.
