India's new EV policy slashes import duties to attract global automakers, but Tesla shows no interest in local manufacturing. Here's what it means for the country's EV future.
Tesla Declines Local Manufacturing in India Despite Lucrative EV Policy Incentives
As India rolls out its much-anticipated Electric Vehicle (EV) policy to revolutionize the automotive sector, Tesla Inc. has surprisingly decided not to participate in local manufacturing, a move confirmed by Union Minister for Heavy Industries, H.D. Kumaraswamy.
The government’s new EV policy aims to boost domestic production by cutting import taxes from 70% to 15% for foreign manufacturers willing to invest at least $500 million and begin production within three years. Despite these significant incentives, Tesla’s focus remains on importing electric vehicles into India, rather than building them locally.
“Tesla, we are not actually expecting interest from them... They are not interested in manufacturing in India,” stated Kumaraswamy during a recent media interaction.
New EV Policy: Aiming for 30% Electric Vehicle Adoption by 2030
India’s revamped EV policy is a cornerstone of the country’s broader strategy to increase the EV share in total car sales from 2.5% in 2024 to 30% by 2030. Under the new scheme:
- Companies must begin manufacturing within 3 years of approval.
- Local sourcing requirements are 25% by the third year and 50% by the fifth year.
- Up to 8,000 EVs per year can be imported at reduced tax rates.
- Unused import capacity can be carried forward to the next fiscal year.
- Investment in charging infrastructure, R&D, and machinery is also encouraged.
Tesla’s Strategy: Import Over Investment
Despite previously exploring retail presence in cities like Mumbai and New Delhi, Tesla has put its India investment plans on hold. The EV giant is reportedly considering importing vehicles from its Berlin Gigafactory, as CEO Elon Musk continues to criticize India’s high import duties on foreign EVs.
Although the policy was initially crafted to woo Tesla, the company now appears to have shifted focus, preferring exports to India over direct local engagement.
Global Automakers Show Interest in Indian EV Market
While Tesla stays on the sidelines, several leading global automakers, including Mercedes-Benz, Volkswagen, Hyundai, and Kia, have shown strong interest in the new policy framework.
A spokesperson from Skoda Auto Volkswagen India said:
“We are closely monitoring the development of EV-related policies in India and assessing their implications for our long-term strategy.”
These automakers view India—the world’s third-largest automobile market—as a key growth destination for electric mobility.
🇮🇳 Indian EV Giants Raise Concerns Over Policy Impact
Domestic automakers like Tata Motors and Mahindra & Mahindra, who have already made large investments in local EV production, have voiced concerns about the potential disruption caused by reduced import duties. They argue that it could dilute the competitive advantage of local manufacturers and slow down homegrown innovation.
Tata Motors, for instance, is ramping up efforts in EV battery localization and developing fast-charging solutions, aiming to lead India’s EV transformation.
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