India: Tesla to Use New Regulations to Promote Electric Mobility
India is planning to reduce import duties to give international automakers a chance to analyze the Indian market. Tesla will take advantage of tax incentives and will be able to sell German-made cars in India.
Tesla is considering diverting the sale of several thousand cars made in Germany from the Chinese market to the Indian market. According to The Times of India, Elon Musk thus plans to analyze the current state and prospects of the Indian electric car market, “taking advantage of the incentives announced by Prime Minister Narendra Modi’s government as part of New Delhi’s policy to encourage electromobility.”
According to the Indian newspaper, Elon Musk’s automaker may export around 8000 electric cars to India in 2025 with a reduced duty of 11% to 15% instead of the current 110%. There have also been reports of plans to build a Tesla plant in India, which would require an investment of half a billion dollars.
The most likely Indian states to host a Tesla plant are Gujarat, Maharashtra, and Tamil Nadu. Musk had earlier harshly criticized India for the country “imposing more than 100-percent duties on imports of electric vehicles in order to protect local automakers like Tata Motors.” While Musk’s announcement has yet to be followed by any concrete steps, the Indian government has accepted the duty reduction to “allow international manufacturers to test the opportunities offered by the country’s market before investing in it.” In March 2024, the Indian government unveiled a new policy on electric vehicles, under which import duties could be reduced to 11-15%, “provided the automaker invests at least $500 million and opens a plant in the country.”
During Prime Minister Narendra Modi’s recent visit to the White House, US President Donald Trump also criticized India’s high duties imposed on car imports. The two sides agreed to “work toward a trade agreement as soon as possible and resolve the tariff impasse.”
Trump condemned India’s trade policies and also criticized Elon Musk for intending to build a $500 million plant in India instead of the United States. “Elon Musk will not be able to sell a single car in India,” Trump said. “Every country in the world is taking advantage of us by imposing duties. It is almost impossible for us to sell a car in India, for example.”
Trump also criticized Tesla’s strategy in India, where Musk is rumored to be planning to build a factory. According to the US President, such a move would be unfair to the United States. “If Musk decides to build a factory in India, that’s fine, but it’s unfair to us. Extremely unfair,” Trump said in an interview with Fox News.