Flagship India EV Policy Is a ‘Non-Starter’ for Global Firms

Tesla isn’t keen on manufacturing locally and instead wants dealerships and showrooms to sell imported cars.

By Alisha Sachdev, Bloomberg News | Updated: 3 June 2025 21:14 IST

Flagship India EV Policy Is a ‘Non-Starter’ for Global Firms

Photo Credit: Pexels

Applications may open as early as this month and extend till March 15 next year

Highlights

Tesla has long wanted to enter India
Demand for EVs is still rising in India
India is the world’s third-largest car market

India is rolling out a new flagship electric vehicle policy that aims to lure global automakers into making cars locally. It knows Tesla Inc. may still not bite.

The Narendra Modi-led government will soon start accepting applications under the EV incentive program that was unveiled in March last year, HD Kumaraswamy, India's heavy industries and steel minister told reporters in New Delhi on Monday. Bloomberg News reported on this earlier in the day.

The policy offers to slash duty to 15 percent on any imported electric car priced from $35,000 (roughly Rs. 30 lakh) if the maker invests at least Rs. 4,150 crore, or about $500 million (roughly Rs. 4,150 crore), to set up a local plant within three years. Up to 8,000 cars yearly can be imported at this reduced rate.

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But Tesla is unlikely to participate as it isn't keen on manufacturing locally and instead wants dealerships and showrooms to sell imported cars, Kumaraswamy said, without elaborating. Tesla has long wanted to enter India, but disagreements over import duties and local manufacturing commitments have stalled progress.

BYD is a no-go for the South Asian nation, showing New Delhi's lingering angst with China. India's commerce minister said in an April interview that the country needs to be “cautious” about who it allows to invest. VinFast Auto is already building a factory in India, even before the new policy kicked in.

Non-Starter

“The EV policy could be a non starter,” said Jay Kale, sector analyst at local brokerage Elara Securities India Pvt., explaining that there was little benefit in terms of “pure-play” EV makers without Tesla, BYD and VinFast in the fray.

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Some global legacy automakers could benefit by setting up EV-only plants in India and importing electric cars initially under this policy, according to Kale. “However, how these models pan out in India have to be seen as most of these carmakers haven't been successful in their home markets in EVs,” he said.

While the government is keen to boost manufacturing in the world's third-largest car market where demand for EVs is still rising, it faces stiff resistance from domestic heavyweights including Tata Motors and Mahindra & Mahindra, which have long been protected by a wall of high tariffs.

Stringent Conditions

“The policy will likely draw limited interest from foreign automakers as the investment and revenue requirements are too stringent,” said Komal Kareer analyst at BloombergNEF in New Delhi.

It mandates a minimum revenue of Rs. 5,020 crore ($586 million) in the fourth year and Rs. 7,500 crore a year later for any applicant approved under this policy. Those falling short will face a penalty of up to three percent on the revenue gap.

“Most automakers either do not have an eligible model that they can import for the customs' duty exemption or they will not be able to meet the revenue requirements,” Kareer said.

Applications may open as early as this month and extend till March 15 next year, according to people familiar with the discussions who did not want to be named.

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

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