Tesla not keen on manufacturing in India, says Minister; focus likely on showrooms

New Delhi, June 2: Tesla, the electric vehicle giant owned by Elon Musk, is currently not interested in setting up a manufacturing plant in India, Union Minister for Heavy Industries H.D. Kumaraswamy said on Monday. Instead, the company appears to be focusing on establishing showrooms in the country.

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"Tesla is not expected to manufacture in India at this stage. They are only planning to open showrooms," the minister told reporters.

Supporting the minister's remarks, Heavy Industries Secretary Kamran Rizvi added, "The company’s real intent will be clear once they formally submit an application. So far, what we’ve heard from their representatives is informal."

Despite Tesla’s apparent reluctance, the minister noted that several European carmakers have shown strong interest in setting up manufacturing units in India under the government's new electric vehicle (EV) policy. Companies such as Hyundai, Mercedes-Benz, Škoda, and Kia are exploring investments, partly because India’s left-hand drive system aligns with their home markets, reducing the need for significant design changes. In contrast, the U.S., where Tesla is based, predominantly uses right-hand drive vehicles, creating additional export challenges.

India’s EV policy, introduced in 2022, offers significant incentives to attract global manufacturers. Under this policy, companies that invest at least USD 500 million in setting up a manufacturing plant in India are eligible for a reduced import duty of 15%. Additional conditions include sourcing 25% of vehicle components locally within the first three years, increasing to 50% by the fifth year. Companies are also permitted to export up to 8,000 units annually to India at the same reduced duty rate.

Previously, there were reports suggesting Tesla was exploring the possibility of importing vehicles and selling them through showrooms in India. Elon Musk had expressed interest in the Indian market, but high import duties had been a longstanding obstacle. The new EV policy was expected to pave the way for Tesla's entry, but recent government statements suggest the company may still be hesitant to make a full manufacturing commitment.

(With ANI inputs)