A Rocky Courtship:Tesla’s Early Setbacks

Tesla has tried to enter India three times since 2019, but regulatory roadblocks and soaring import duties derailed its efforts. Its most recent attempt finally saw a showroom launch in Mumbai on July 15, 2025—nearly six years since Elon Musk first hinted at an Indian push.

 The Tax Barrier: Import Tariffs and Policymaker Standoff

India imposed import duties of up to 100% on EVs priced above $40,000 and 60% or more below that threshold, plus a social welfare levy on EVs. Tesla lobbied for tax cuts to test the market via imports first, but the Indian government insisted the company manufacture vehicles locally under its Make in India policy to access any duty relief.

India later introduced a scheme cutting duties to 15%, but only if automakers commit at least $486–500 million and begin local production within 3–5 years. Tesla refrained from making such upfront commitments.

 Spotlight on Slinging Blame: Musk Vs PM Modi

Elon Musk publicly blasted India’s tariffs as some of the highest in the world and long refused to commit to manufacturing before testing demand. Meanwhile, Prime Minister Narendra Modi and ministers like Nitin Gadkari welcomed Tesla—but emphasized local production as a condition, stating tax breaks were only available if vehicles were assembled in India.

Though Musk eventually held meetings with Modi and Indian officials, a planned India visit in 2024 was abruptly cancelled due to “heavy Tesla obligations,” leaving Indian ministers frustrated.

Market Realities: Demand, Competition, and Infrastructure Gaps

Despite being the world’s third-largest vehicle market, EVs in India made up just ~2–4% of total car sales in 2024‑25. Most Indian buyers prioritize affordability; as a result local brands like Tata, Mahindra, MG, and soon Maruti Suzuki have become dominant with EVs priced under ₹20 lakh (~$20k). In contrast, even with reduced import tariffs, Tesla’s Model Y launched in India at ₹60–68 lakh ($71k–79k)—placing it firmly in the luxury bracket.

Tesla also lacks its proprietary Supercharger network in India. Combined with weak rural road conditions and patchy power supply in many regions, infrastructure challenges remain steep.

Strategic Hesitations and Silver Linings

Tesla has preferred a retail‑first strategy, opening showrooms and hiring staff in Mumbai and Delhi before committing to manufacturing. The company posted job listings and created a presence—but still has no official factory plans.

Indian industrialists, including JSW’s Sajjan Jindal, have questioned Tesla’s long-term viability, arguing that local players can outproduce Tesla and better serve India’s price-sensitive market. Former NITI Aayog chief Amitabh Kant echoed the sentiment, affirming strong competition from Tata and Mahindra.

Tesla may be refocusing attention on India to counteract declining global sales. But without manufacturing or affordable offerings like the soon‑rumored Model 2, its prospects remain limited.

 Verdict: Why Tesla “Failed” in India (So Far)

The clash between Tesla’s reluctance to build locally and India’s insistence on in-country manufacturing under Make in India stalled entry. Even when duty reductions emerged, Tesla’s high pricing, lack of infrastructure, and fierce domestic EV competition kept it limited to the niche luxury segment. Musk’s avoidance of firm commitments and India’s protective stance toward homegrown automakers left no room for a broader rollout.

Tesla might succeed eventually—if it builds locally, commits significant investment, and brings more affordable models. Otherwise, this entry feels like a calculated pilot phase, not a full-scale launch.

Tesla’s cautious entry into India reflects a delicate dance between Musk’s global business caution and India’s industrial nationalism. Until Tesla commits to manufacturing with a broader product base, its India presence remains symbolic rather than transformational.