Tesla not to manufacture in India

New Delhi

Tesla will not set up a manufacturing plant in India, Union Minister for Heavy Industries HD Kumaraswamy said on Monday. Instead, the US-based electric carmaker plans only to open showrooms in the country. "Tesla is not showing interest in manufacturing in India," he told reporters, noting that discussions so far were informal.

Heavy Industry Secretary Kamran Rizvi added that Tesla’s real intentions will become clearer once formal applications are reviewed. While Tesla remains hesitant, several European carmakers have expressed strong interest in India’s electric vehicle (EV) market.

Companies like Hyundai, Mercedes-Benz, Skoda, and Kia are keen to manufacture in India under the new EV policy. The minister explained that European companies prefer India partly because they also use left-hand drive systems, making exports easier than for US manufacturers, which use right-hand drive.

India’s new EV policy, launched in 2022, offers attractive benefits. Companies investing at least $500 million in local manufacturing can import up to 8,000 electric vehicles annually at a reduced 15% duty rate. To qualify, firms must locally source 25% of parts within three years, increasing to 50% by the fifth year.

Tesla had earlier shown interest in entering the Indian market. Elon Musk had said import duties were a concern. However, after the new policy reduced these duties, expectations grew. Despite the policy changes, Tesla has chosen only to open showrooms for now.

Meanwhile, the Indian government remains optimistic. With major European brands stepping in, India could soon become a global hub for electric vehicle production. The incentives and favorable conditions continue to attract international auto giants looking to expand in Asia.