Tesla India entry: Days after PM Narendra Modi met Tesla CEO Elon Musk, US President Donald Trump has said that any potential plans by the EV maker to build a factory in India would be ‘very unfair’. Trump’s comments came as part of a conversation with Elon Musk on Sean Hannity’s programme.
During the interview, the US President, who commenced his second term in January, highlighted his persistent stance on global exploitation of the US through tariffs. He said, “…every country in the world takes advantage of us, and they do it with tariffs. They makes — make it — it’s impossible for him to sell a car, practically, in, as an example, India. I don’t know if that’s true or not, but I think —”
Musk verified this by saying, “The tariffs are like 100% import duty,” to which Trump concurred, describing the tariffs as “so high.”
Both Musk and US President Donald Trump have in the past expressed concerns about India’s steep import duties on automobiles.
A White House fact sheet indicates that India levies a 100% tariff on US motorcycles, whilst the US imposes merely 2.4% on Indian motorcycles.
Trump further elaborated, “Now, if he built the factory in India, that’s okay, but that’s unfair to us. It’s very unfair.”
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Below is a part of the transcript from the interview available on the official website of the White House:
THE PRESIDENT: And I was doing it — you know, I charged China tariffs. I took in hundreds of billions of dollars, and I was doing that. But when we got — we had the greatest economy in history. But then we got hit with COVID, and we had to solve that problem, because I was doing it — and now I said, I want to come back and do the recipri- — because every country in the world almost — we have a deficit with almost every country — not every one, but just about, pretty close.
And — but every country in the world takes advantage of us, and they do it with tariffs. They makes — make it — it’s impossible for him to sell a car, practically, in, as an example, India. I don’t know if that’s true or not, but I think —
MR. MUSK: The tariffs are like 100 percent import duty.
THE PRESIDENT: The tariffs are so high —
MR. MUSK: Yeah.
THE PRESIDENT: — they don’t want to — now, if he built the factory in India, that’s okay, but that’s unfair to us. It’s very unfair.
And I said, “You know what we do?” I told Prime Minister Modi yesterday — he was here. I said, “Here’s what you do. We’re going to do — be very fair with you.” They charge the highest tariffs in the world, just about.
Q 36 percent?
THE PRESIDENT: Oh, much — much higher.
MR. MUSK: It’s 100 percent on — auto imports are 100 percent.
THE PRESIDENT: Yeah, that’s peanuts. So, much higher. And — and others too. I said, “Here’s what we’re going to do: reciprocal. Whatever you charge, I’m charging.” He goes, “No, no, I don’t like that.” “No, no, whatever you charge, I’m going to charge.” I’m doing that with every country.
MR. MUSK: It seems fair.
Tesla’s India Plans
Tesla appears to be making concrete steps towards introducing its electric vehicles to India. Following a recent meeting between Prime Minister Narendra Modi and Elon Musk in the US, Tesla has begun advertising retail positions in Mumbai.
Sources told TOI that the initial phase will involve importing vehicles for sale through retail outlets in Mumbai and Delhi.
This development appears to signal a serious intent from Tesla to establish operations in India, following years of tentative discussions. A planned meeting between Musk and Modi in early 2024 was cancelled at the last moment, but the current progress suggests renewed commitment.
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The company has posted 13 vacancies on its website and LinkedIn, covering various customer service and administrative roles in Mumbai. These include a store manager position to oversee sales operations, suggesting plans for a showroom. The company is also seeking staff for delivery operations and customer support. Previously, Tesla had recruited some staff in India but had to terminate their employment when plans were suspended.
Tesla, which has been evaluating Indian market opportunities for several years, is anticipated to utilise the EV policy with planned investments between $2 and $3 billion. The company previously indicated its intention to produce an affordable EV in India, targeting a price range of Rs 25-30 lakh, with plans for regional exports. The government views Tesla’s proposals favourably, particularly following Apple’s successful iPhone manufacturing and export operations in India.
Last year’s introduction of a new scheme to attract EV manufacturing investments was widely viewed as specifically targeting Tesla. The initiative offered reduced import duties of 15% for electric vehicles if manufacturers invested a minimum of $500 million and commenced production within three years. Companies could import up to 8,000 vehicles annually at this reduced rate.
The recent Union Budget’s decision to reduce import duty from 100% to 70% on vehicles priced above $40,000 (approximately Rs 35 lakh) may have further influenced Tesla’s strategy.
Although the basic customs duty decreased by 30%, the replacement of the 10% Social Welfare Surcharge with a 40% Agriculture Infrastructure and Development Cess (AIDC) maintained the overall tax burden.
