HD Kumaraswamy, the Minister for Heavy Industries, has announced that Tesla does not appear to be eager to begin manufacturing electric vehicles in India. He stated, “We’re not actually expecting from them. They’re planning to start with showrooms,” while revealing details about the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI).
- Two Tesla showroom locations have been confirmed.
- A potential manufacturing facility in Maharashtra is under consideration.
Overview of the Scheme to Promote Manufacturing of Electric Passenger Cars in India
Initial Import Duty and Production Quotas
The SPMEPCI allows for the initial importation of electric passenger cars with a minimum cost, insurance, and freight (CIF) value of $35,000 (approximately Rs 29.92 lakh) at a reduced duty rate of 15 percent, applicable for five years. This rate contrasts with the conventional import tariffs ranging from 70 to 100 percent. This initiative is limited to 8,000 vehicles annually, provided that manufacturers invest a minimum of $500 million (around Rs 4,275 crore) in local production within three years, ensure 25 percent domestic value addition, and aim for 50 percent by the fifth year.
Applications for the scheme will be accepted soon, with a 120-day period for submissions. Only large manufacturers boasting annual revenues of at least Rs 10,000 crore and global assets of Rs 3,000 crore will qualify.
Tesla’s Plans for Entry into India
Showroom Development in Mumbai and Delhi
Following the announcement of the scheme in early 2024, many considered it a positive development for Tesla, which has voiced concerns over India’s high car import duties. The government had contemplated lowering tariffs specifically to persuade Tesla to manufacture in the country. However, despite the finalization of the EV import policy, Tesla has yet to make a firm commitment to setting up production in India.
By February 2025, Tesla announced the selection of showroom locations in Mumbai’s Bandra Kurla Complex and Delhi’s Aerocity, each covering around 5,000 square feet. Additionally, job postings for sales, customer support, and operations in India have been advertised. Given the current situation, it appears that Tesla may miss out on the benefits of the reduced import duties. This uncertainty places its plans for establishing a manufacturing hub in Maharashtra on hold, as previously hinted.
Interest from Other Automakers in Make in India Initiatives
Challenges Faced by Volkswagen and Skoda
Kumaraswamy revealed that several automakers, including Mercedes-Benz, Hyundai, Kia, and Volkswagen, have demonstrated a formal interest in the manufacturing scheme. Notably, Mercedes, Hyundai, and Kia are already selling electric vehicles in India; examples include the Mercedes EQS 580, Hyundai Creta Electric, and Kia EV9. However, Volkswagen and Skoda currently lack any electric vehicles in the Indian market. These existing EVs are either locally assembled or fully imported. The impact of the SPMEPCI guidelines on electric vehicle pricing in India remains to be seen.
*Converted rates as of June 3, 1 PM IST.
