Electrifying Moves: Global Auto Majors Eye India for EV Manufacturing, Tesla Takes a Backseat

Key Highlights

India has rolled out a bold new policy to transform itself into a global hub for electric vehicle (EV) manufacturing. The government’s Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI) offers enticing incentives for global automakers willing to invest and build in the country. The application window for this scheme will open soon.

Industry Response

Mercedes-Benz, Skoda-Volkswagen, Hyundai, and Kia have all expressed strong interest in setting up EV manufacturing plants in India. These companies have been in active discussions with the government and are expected to formally apply for the scheme.

The policy requires a minimum investment of Rs 4,150 crore and mandates that production must begin within three years of approval. Approved companies can import up to 8,000 completely built electric vehicles per year at a significantly reduced customs duty of 15% for five years, provided each imported car has a minimum value of $35,000.

Tesla’s Stand

In contrast, Tesla has decided not to participate in local manufacturing. According to Union Minister H D Kumaraswamy, Tesla is only interested in opening showrooms and selling imported vehicles, rather than setting up production facilities.

Tesla’s hesitation is attributed to India’s historically high import tariffs, which CEO Elon Musk has previously cited as a barrier to local manufacturing.

Policy Impact

The government’s move aims to attract fresh investment, generate employment, and boost the share of EVs in India’s automotive market, currently at just 2.5%.

Domestic players like Tata Motors and Mahindra have already invested heavily in local EV production and are watching these developments closely.

International Trade Angle

The recent announcement by US President Donald Trump to double tariffs on steel and aluminium is expected to have minimal impact on India’s EV ambitions, as per Minister Kumaraswamy.

Sources: Economic Times, Reuters, Hindustan Times, Business Standard, Indian Express, Times of India, Outlook Business