India is rolling out a new flagship electric vehicle policy aimed at attracting global automakers to build vehicles locally. It knows Tesla Inc. may still not bite.
The Narendra Modi-led government will soon start accepting applications for the electric vehicle incentive scheme announced in March last year, Heavy Industries and Steel Minister HD Kumaraswamy told reporters in New Delhi on Monday. Bloomberg News reported this earlier in the day.
The policy stipulates that the customs duty on any imported electric vehicle will be cut to 15% if the manufacturer invests at least $35,000 (approximately Rs. 30 lakh). Invest 41.5 billion rupees, or about US$500 million (approximately 41.5 billion rupees), within three years to establish a local factory. A maximum of 8,000 vehicles can be imported per year under this discount.
But Kumaraswamy said Tesla was unlikely to participate as it was not keen on local manufacturing and would prefer dealers and showrooms to sell imported cars, without elaborating. Tesla has long wanted to enter India, but disagreements over import tariffs and local manufacturing commitments have hampered progress.
BYD is taboo for the South Asian country, a sign of New Delhi’s lingering anxieties about China. India’s commerce minister said in an interview in April that the country needed to be “cautious” about what investments were allowed. Even before the new policy came into effect, VinFast Auto was already building factories in India.
Not started
“The EV policy may not get off the ground,” said Jay Kale, an industry analyst at local brokerage Elara Securities India Pvt. He explained that without the participation of Tesla, BYD and VinFast, there would be little benefit for “pure electric” EV makers.
Kalai said some global legacy carmakers could benefit by setting up pure electric vehicle plants in India and initially importing electric vehicles under the policy. “However, it remains to be seen how well these models perform in India as most carmakers have not been successful in their local EV market,” he said.
While the government is keen to boost manufacturing in the world’s third-largest auto market, where demand for electric vehicles is rising, it faces stiff resistance from domestic heavyweights such as Tata Motors and Mahindra & Mahindra, which have long been protected by high tariffs.
strict conditions
“The policy is likely to attract limited interest from foreign automakers as investment and income requirements are too stringent,” said Komal Kareer, an analyst at Bloomberg New Delhi.
It provides for a minimum income of Rs. 50.2 billion ($586 million) in the fourth year, and after one year, any applicant approved under the policy will receive 75 billion rupees. Those who don’t meet the requirements face fines of up to three percent of the income gap.
“Most automakers either don’t have qualifying models that they can import to get tariff exemptions or they can’t meet the revenue requirements,” Khalil said.
Applications could begin as early as this month and be extended to March 15 next year, according to people familiar with the matter who asked not to be named.
© 2025 Bloomberg
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