Tesla Not Planning Electric Vehicle Manufacturing in India, Minister Confirms
| 2025-06-02
According to the Union Minister, Elon Musk’s Tesla is not interested in setting up production or manufacturing units in India.
Tesla plans to open showrooms in India but has shown no interest in local EV manufacturing, according to Heavy Industries Minister Kumara Swamy.
Tesla, the electric vehicle company led by billionaire entrepreneur Elon Musk, has no current plans to manufacture cars in India despite growing interest from other international automakers, according to Indian government officials.
Speaking at a press conference in New Delhi, Minister of Heavy Industries Kumara Swamy stated that Tesla has only expressed interest in opening showrooms and has not engaged meaningfully with the government’s initiative to promote electric vehicle (EV) manufacturing in the country.
"Tesla... They are more interested only to start showrooms. They are not interested in manufacturing in India," Mr Swamy told reporters.
The announcement comes as India’s Ministry of Heavy Industries finalises the guidelines for its new “Scheme to Promote Manufacturing of Electric Cars”, aimed at encouraging foreign investment in domestic EV production. The policy requires automakers to begin manufacturing electric vehicles within three years of approval and to achieve a minimum of 25% local sourcing within that period, increasing to 50% by the fifth year.
Government officials said Tesla’s involvement in policy discussions has been minimal. A company representative reportedly attended the initial stakeholder meeting but did not participate in later rounds of consultation.
While Tesla has taken steps to establish a retail presence in India, including leasing space for a showroom in Mumbai’s Bandra Kurla Complex, the lack of manufacturing commitments suggests a limited strategy focused on vehicle imports.
According to lease documents, Tesla finalised a five-year agreement for the 4,003-square-foot space beginning in February 2025, agreeing to pay approximately $446,000 in annual rent for the first year.
Other Automakers Show Interest
In contrast to Tesla’s stance, several global automobile manufacturers have indicated a willingness to invest in Indian EV manufacturing under the new scheme.
Companies such as Mercedes-Benz, Hyundai, Kia, and the Volkswagen-Skoda alliance have all shown interest, according to the Ministry of Heavy Industries.
The scheme, officially notified in March 2024, is expected to begin accepting applications in the coming weeks. To qualify, companies must invest at least ₹4,150 crore (approximately $500 million) and meet phased localisation targets.
The programme also offers reduced import duties of 15% for approved applicants, significantly lower than the standard rates, to encourage initial market entry and localisation.
U.S. Political Reaction
The lack of Tesla’s participation in Indian EV manufacturing has drawn comment from the United States as well. U.S. President Donald Trump has criticised the possibility of American companies establishing production units overseas to circumvent tariffs.
“If Tesla were to build a factory in India to avoid U.S. duties, that would be very unfair,” President Trump has said. Elon Musk has been one of Trump’s economic advisors and reportedly a major contributor to his 2024 presidential campaign.
A similar warning was previously issued to Apple Chief Executive Tim Cook when the tech firm considered shifting parts of its production to India amid trade tensions with China.
Background and Context
Tesla has previously cited high import duties as a major obstacle to launching its vehicles in India. India imposes one of the world’s highest tariffs on imported vehicles, which can reach up to 100%, significantly increasing retail prices for foreign car brands.
While the company had explored the possibility of entering the Indian market for several years, its official steps—including registering a local business entity and advertising job positions—have primarily focused on retail operations rather than local assembly or production.
Elon Musk had announced in April 2024 that a visit to India was delayed due to ongoing company obligations. As of June 2025, Tesla has not publicly disclosed any revised timeline for deeper involvement in the Indian manufacturing sector.
India, the world’s third-largest automobile market, has made domestic EV production a central part of its industrial policy. With air pollution concerns and energy security considerations on the rise, the government has prioritised electrification of transport and aims to become a regional manufacturing hub for electric vehicles.
Whether Tesla’s decision signals a longer-term reluctance or a temporary delay remains uncertain. For now, its engagement in India appears limited to retail expansion, while other automakers pursue more ambitious manufacturing commitments.
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