Tesla has reportedly decided not to set up a manufacturing facility in India, contrary to earlier expectations. The electric vehicle (EV) giant is now focusing on expanding its retail presence in the country, with plans to open two showrooms.
The move marks a significant shift from earlier speculation that Tesla would invest over $2 billion in building a car manufacturing plant in India.
That anticipation was partly driven by India’s recently announced electric vehicle policy, which offers reduced import duties and other incentives to attract global EV makers.
Under the policy, international manufacturers are allowed to import up to 8,000 electric cars annually, valued at a minimum of $35,000, at a concessional import duty rate of 15%—a considerable drop from the standard 70–110%. In return, companies must commit to substantial domestic investment and value addition over a five-year period.
While many believed this policy would lure Tesla into local production, the company has opted for a limited entry through retail and service channels. Shortly after the policy was unveiled, Tesla had posted several job listings in India, including roles in store management, business operations, and customer engagement.
Tesla’s withdrawal from manufacturing plans in India also coincides with increased global competition, especially from Chinese EV manufacturer BYD.
Additionally, political scrutiny in the U.S. over American companies expanding abroad may have influenced the decision. Tesla’s recent prioritization of its operations in China—its second-largest market—over India has also raised questions about its long-term strategy in South Asia.
Despite shelving manufacturing plans for now, Tesla’s move to open showrooms indicates a continued interest in testing India’s fast-growing EV market through a more cautious and low-risk approach.
