The Government of India has decided to move forward with its new electric vehicle (EV) policy despite Tesla’s lack of interest in manufacturing in the country. On Monday, Union Minister for Heavy Industries H.D. Kumaraswamy confirmed that Tesla has shown no intent to establish a manufacturing unit in India.
According to a report by The Economic Times, the Indian government will soon begin accepting applications under the EV incentive program that was originally announced in March 2024.
Key Highlights of the New EV Policy
India’s new EV policy aims to reduce import duties on electric cars priced above $35,000 (around ₹30 lakh) to 15%, down from the current range of 70% to 110%. However, to qualify for this benefit, auto companies must:
- Invest at least ₹4,150 crore (~$500 million) in India
- Set up a local manufacturing plant within three years
- Import up to 8,000 EVs per year at the reduced duty rate
If a company fails to utilize the full import quota in a given year, the unused quantity can be carried forward to the following year.
Tesla’s Absence and Interest from Other Global Automakers
Tesla CEO Elon Musk has long criticized India’s high import tariffs, and the company appears interested only in selling imported cars through dealerships and showrooms—not in local manufacturing.
In contrast, companies like Mercedes-Benz, Volkswagen, Hyundai, and Kia have expressed strong interest in the new EV policy. Vietnamese automaker VinFast Auto is already constructing a manufacturing facility in India, signaling deeper commitment to the Indian market.
Challenges and the Road Ahead
Analysts like Jay Kale from Elara Securities have raised concerns that without Tesla, BYD, and VinFast, this EV policy may become a “non-starter.” Chinese automaker BYD is unlikely to receive entry approval due to India’s cautious stance on Chinese investments, especially in strategic sectors.
India is currently the third-largest car market in the world, and EV demand is rising steadily. In 2024, EVs accounted for only 2.5% of total car sales. However, the government aims to increase this figure to 30% by 2030.
Indian manufacturers like Tata Motors and Mahindra & Mahindra have opposed the policy, as they benefit from the current high tariff structure that protects local players from foreign competition.
Final Thoughts
India’s latest EV policy is a bold attempt to attract global players and accelerate EV adoption. While Tesla’s reluctance may limit the immediate impact, growing interest from other major automakers shows that India remains a key destination for electric mobility investments.
Whether the policy can achieve its full potential will depend on infrastructure readiness, policy stability, and how effectively India balances foreign investment with domestic industry protection.