Tesla Edges Closer to Indian Market, Avoids Govt's Ideal Route

Tesla has officially entered the Indian market by opening its first showroom in the Bandra-Kurla Complex in Mumbai, where the company has been awaited for years. The second store in Delhi-NCR is likely to be opened. But the entry of the U.S. EV giant to India is not a manufacturing-driven entry that will obey the expectations of Indian policymakers rather a retail-first one.

Tesla has failed to look into constructing a local factory after more than ten years of talks. Privately-imposed high import duties up to 100 percent have been a bone of contention. Elon Musk, the company's chief executive officer, accused India of having the world's highest tariff regime and requested temporary exemptions for clean energy vehicles.

India made a new EV policy in March 2024, which provided a lower tariff (an initial 15 percent) to an automaker making investments of at least 4,150 crore rupees and agreeing to produce locally within three years. Tesla has shown interest, but officials responded that the company never took formal steps afterward.

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Rather, Tesla is experimenting with its market demand through the importation of its Model Y in Shanghai. The car, which is about 27.7 lakh rupees or 32,270 US dollars when imported, will be much more expensive at the end of duties and local taxes.

According to industry watchers, Tesla is just playing it safe by entering the market that is among the most competitive and protectionist. There has been opposition to foreign rivals applying tariff relaxations by the domestic players, such as Tata Motors and Mahindra. In the meantime, the international margins of Tesla are narrowing, as during Q1, it declined by 13% and its Chinese market share.

With India targeting 30 percent adoption of EVs by 2030, the entry by Tesla, albeit just in a handful of cities, spells out the growing curiosity in high-end EVs in India. At least, this opening of its showroom, on July 15, is a symbolic start.