Union Minister for Heavy Industries, HD Kumaraswamy, has confirmed that Tesla does not appear interested in setting up manufacturing operations in India, despite recent policy changes aimed at encouraging foreign electric vehicle (EV) makers to build locally. “We’re not expecting them to manufacture here as of now. Their current focus seems to be on launching showrooms,” Kumaraswamy stated during the announcement of the new Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI).
What the New EV Scheme Offers
The SPMEPCI aims to attract global carmakers by offering reduced import duties and a roadmap for setting up local manufacturing. Under the scheme:
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EVs with a minimum CIF (Cost, Insurance and Freight) value of USD 35,000 (approximately ₹29.92 lakh) can be imported at a concessional 15% duty for five years.
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This import benefit is capped at 8,000 units per year.
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Manufacturers must invest at least ₹4,150 crore (around USD 500 million) to establish a factory in India within three years of approval.
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A minimum of 25% domestic value addition is required within three years, rising to 50% by the fifth year.
To qualify, companies must have an annual global revenue of ₹10,000 crore and assets worth ₹3,000 crore.
Tesla’s India Strategy: Sales First, Manufacturing Later?
Tesla has long expressed concerns over India’s steep import duties, and many industry watchers believed the SPMEPCI was tailored in part to accommodate the American EV giant. However, Tesla appears to be prioritizing retail presence over production.
In early 2025, Tesla finalized plans for two showrooms in India – one in Mumbai’s Bandra Kurla Complex and another in Delhi’s Aerocity – both estimated to span 5,000 square feet. The company has also begun recruiting for sales and support roles, signaling a strong interest in entering the Indian market at a consumer level. While there were earlier reports suggesting Maharashtra was being considered as a manufacturing site, no concrete commitments have followed.
Other Automakers Show Interest
While Tesla remains on the sidelines regarding local production, several other major automakers are actively engaging with the Indian government’s Make in India initiative. According to Kumaraswamy, Mercedes-Benz, Hyundai, Kia, Volkswagen, and Skoda have all expressed formal interest.
Among these, Mercedes, Hyundai, and Kia already sell electric vehicles in India, either through local assembly or imports. Volkswagen and Skoda have yet to launch any EVs in the country but are reportedly exploring opportunities under the new policy.
As the government opens the application window for the SPMEPCI, industry observers are watching closely to see how it reshapes the pricing and availability of EVs in India – and whether Tesla will eventually join the Make in India movement.
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