The long-standing buzz about Tesla setting up manufacturing in India seems to be settling—at least for now. Union Heavy Industries Minister H.D. Kumaraswamy stated on Monday, June 2, 2025, that Tesla is “not interested” in producing cars locally. This comes even as the Indian government rolls out new policies designed to entice electric vehicle makers to set up shop and boost local production.
Kumaraswamy’s remarks offer a pretty clear snapshot of Tesla’s near-term plans. Instead of building a factory, the American EV giant appears focused on opening showrooms to sell imported vehicles. It’s a notable moment in the ongoing talks between Tesla and Indian authorities, who have been pushing hard for domestic manufacturing to create jobs and stimulate economic growth.
Waiting on a Formal Application
That said, the story might not be entirely closed. Officials within the Heavy Industries Ministry added a bit of nuance to the minister’s statement. Heavy Industry Secretary Kamran Rizvi said the “real intent we’ll know when we open the application.” He pointed out that the Minister’s comments were based on informal inputs, leaving the door open for Tesla’s formal application to potentially change the dynamic.
India recently finalized a new incentive scheme to promote electric passenger car manufacturing locally. The policy offers perks like lower import duties—but only for companies that commit to significant local investment and production within a specific timeframe.
Under this revamped scheme, companies promising to invest at least $500 million (roughly Rs 4,150 crore) and start local production within three years can import a limited number of EVs at a reduced import duty of 15%. That’s a huge drop from the previous tariffs, which could be as high as 70% or even 100%. The move was largely seen as an attempt to lure big names like Tesla.
Showrooms Instead of Factories—for Now
Despite these incentives, Tesla seems set on retail first. Kumaraswamy confirmed that Tesla plans to open two showrooms in India, signaling a retail footprint for imported models. Reports from February 2025 already suggested Tesla had locked in leases for showroom spaces in key cities like Mumbai and Delhi.
This focus on importing vehicles rather than making them locally has been a sticking point. Tesla has often criticized India’s steep import duties, which make its cars significantly more expensive for Indian buyers. Elon Musk himself has called these tariffs a major barrier. While the new policy lowers import duties for companies that pledge local production, Tesla’s current reluctance to manufacture in India suggests there might be other hurdles or concerns.
Other Automakers Are Showing Interest
Interestingly, other global carmakers seem more eager to jump on board with India’s EV push. Kumaraswamy mentioned Mercedes-Benz, Skoda-Volkswagen, Hyundai, and Kia as companies expressing strong interest in setting up factories under the new scheme. So, while Tesla is holding back on local manufacturing, the policy is clearly attractive to others in the industry.
India’s goal with this initiative is ambitious: to become a global hub for electric vehicle manufacturing. It aligns with the country’s plans to hit net-zero emissions by 2070 and promote sustainable mobility. Plus, it’s a way to create jobs and support the “Make in India” campaign.
Tesla’s India story has seen a few twists. The original idea of establishing a base in 2022 was shelved after the government insisted on local manufacturing. In 2023, Musk said he was “trying to figure out the right timing” for investment. Earlier this year, a meeting between Musk and Prime Minister Narendra Modi in Washington D.C. stirred optimism for a bigger push. But Musk’s planned visit to India in April got postponed due to “very heavy Tesla obligations.” Instead, he made a surprise trip to China, securing progress on Tesla’s advanced self-driving tech.
Some analysts believe India’s EV market isn’t quite ready for Tesla’s kind of investment. EVs make up less than 3% of passenger vehicle sales in India. Locally produced models tend to be far more affordable than Tesla’s entry-level vehicles globally. Plus, challenges like limited charging infrastructure and road conditions add complexity.
Right now, the Indian EV market is dominated by homegrown players like Tata Motors, which holds over 60% of the share, followed by MG Motors. Tesla also faces stiff global competition from companies like Chinese EV maker BYD, and it’s seen some recent dips in sales worldwide.
The minister’s latest statement pretty much clarifies Tesla’s current game plan in India: selling imported cars through showrooms, not making them here—at least for the time being. Of course, the ball could still roll if Tesla submits a formal manufacturing application, but for now, a Tesla factory in India doesn’t seem to be on the immediate horizon.