Tesla India plant unlikely yet; global carmakers interested, BYD still out

Tesla is not expected to manufacture electric vehicles (EVs) in India in the immediate future, according to Union heavy industries minister H.D. Kumaraswamy. While the American EV giant is making preparations to enter the Indian market with retail outlets, local production does not appear to be part of its near-term strategy.

Speaking at a press conference on Monday, 2 June to launch the updated guidelines for India’s flagship scheme to promote EV manufacturing, Kumaraswamy stated, “Tesla… They are more interested only to start showrooms. They are not interested to start manufacturing in India.”

Despite leasing showroom space in Mumbai’s upscale Bandra Kurla Complex and hiring over two dozen employees — including store managers and service technicians — Tesla has not shown commitment to establishing a manufacturing base. The company is currently working through the process of certification and homologation and is expected to launch its first EV in India within the next few months.

In March 2024, the Indian government introduced a policy aimed at attracting major EV manufacturers by offering import duty concessions. Under this scheme, companies can import up to 8,000 EVs annually at a reduced duty of 15 per cent, provided they commit to invest at least Rs 4,150 crore within three years to set up manufacturing facilities in India. The application window for the scheme is expected to open in the coming weeks and will remain active until 15 March 2026.

However, Tesla has not participated in the most recent rounds of stakeholder consultations for the scheme. “So far, they have not shown interest,” an official familiar with the developments said. “Tesla representatives attended only the first round of discussions.”

In contrast, other global automakers have expressed concrete interest. “Mercedes-Benz, Volkswagen, Skoda, Hyundai, and Kia have all shown interest,” Kumaraswamy said, indicating a growing momentum among foreign players eager to tap into India’s growing EV market. These firms are expected to engage with the government under the revised policy framework, which also includes stringent revenue benchmarks and penalties for non-compliance.

To ensure serious commitment, the policy mandates a minimum revenue of Rs 5,000 crore in the fourth year and Rs 7,500 crore in the fifth year from the commencement of operations. Companies that fall short may incur penalties worth up to 3 per cent of the revenue shortfall.

Meanwhile, Chinese EV major BYD remains excluded from India’s EV ambitions. Union commerce and industry minister Piyush Goyal has previously said India is not ready to welcome BYD, citing concerns over compliance and fair market practices.

“We need to be convinced that they will play by the rules of the land,” Goyal told Bloomberg TV during an interview at the India Global Forum. Referring to potential third-country dumping and previous conduct, Goyal emphasised, “As of now, it’s a no for BYD.”

This is not the first time BYD’s entry has been blocked. In July 2023, the Modi government turned down a proposed $1 billion joint venture between BYD and Megha Engineering and Infrastructures Ltd. BYD has since denied any plans to build a factory in India, dismissing such reports as inaccurate in a statement issued on WeChat.