Tesla’s long-anticipated push to manufacture cars in India appears to be stalling, after a senior minister cast doubt on the company’s intent – raising fresh questions about whether the electric vehicle giant is ready to commit to one of the world’s fastest-growing car markets. The remarks have highlighted a mismatch between India’s policy efforts to attract global carmakers and Tesla’s hesitant approach to committing new manufacturing investment – even as analysts believe the firm is still positioning itself for a longer-term play in the country. Speculation over the US electric vehicle giant’s expansion had mounted in recent months following favourable import duty cuts, alongside the opening of a Tesla showroom in Mumbai. But in comments that undercut the excitement, India’s Minister for Heavy Industries H.D. Kumaraswamy told reporters in Delhi on Monday that Tesla was “more interested” in establishing showrooms and “not interested” in manufacturing in India. The statement quickly sparked debate on social media, where some users argued that Tesla might be delaying its entry because it already had ample production capacity elsewhere. Others suggested the high price point of its cars limited the company’s addressable market in India. India has taken notable steps to court Tesla. In its February budget, the government slashed tariffs on luxury vehicles priced above US$40,000 from 125 per cent to 70 per cent. It had earlier offered a separate pathway for carmakers to pay just 15 per cent in import duties – if they committed to investing at least US$500 million and building a local factory. Those incentives were widely seen as crafted with Tesla in mind, given the company’s global stature and its potential to catalyse India’s nascent EV sector. Tesla CEO Elon Musk had previously cited India’s high tariffs as a key obstacle to entering the market. More recently, US President Donald Trump said it would be unfair to American interests if Tesla were to establish a factory in India. Puneet Gupta, director of mobility at S&P Global, said Tesla would probably test the Indian market before considering manufacturing operations in the country. “It is very important for Tesla to understand the Indian market and what sells here,” he said. The company was also likely to be mindful that Trump wanted companies to make products in America, he said, and would seek to strike a balance before starting any production in the country. Tesla could avail of the concessional 15 per cent import tax, which would be an indication that the company would set up a manufacturing base, he added. Gupta noted that the company would need to make India-centric products that catered specifically to Indian consumers to be successful. “It is very clear that if you are in India, you have to come up with new products and technology consistently. Hyundai has made billions of dollars from India by following this strategy,” Gupta said. Analysts noted that American companies were also likely to wait for an expected trade agreement between the US and India – which reportedly would be implemented in phases from July onwards – before outlining any investment plans, as import duties could come down significantly. “They will need to time their announcement in manufacturing carefully because they will be mindful that if you invest in India, then it catches the eyes of markets like China who may not like their business to go,” Gupta said. However, any delay in Tesla’s manufacturing plans could give more room to competitors such as Hyundai, Mercedes and Kia who are keen on expanding their share in the world’s third-largest automobiles market, analysts warn. “It will give time to others to build their portfolio. But with Tesla’s brand equity and proven products, they can take the market by storm any time,” Gupta said. “Tesla has its own sweet spot.” Tesla’s cars are priced about US$35,000 each, while its top-send models are above US$70,000. Analysts say that while it is hard to predict how tariff changes may affect the company’s products in India, demand for luxury cars in the country has been picking up due to rising incomes. “Importing fully built Teslas will not be sustainable over the long term due to pricing and duties. Setting up a Gigafactory in India [similar to China] will be key to Tesla’s cost competitiveness,” said Suraj Ghosh, an independent analyst. While tech-savvy and affluent buyers were likely to be early customers for Tesla, mass-market penetration would hinge upon affordability, he said. The entry of a major brand like Tesla may, however, help catalyse development of India’s charging network, which is inadequate in rural areas and suffers from patchy distribution, analysts note. Electric vehicles accounted for 2.4 per cent of India’s total vehicle sales in 2024, according to the Federation of Automobile Dealers Associations. The Indian government is aiming for electric vehicles to account for 30 per cent of total vehicle sales by 2030. India has been trying hard to expand the niche industry and has introduced production-linked incentives in the last two years. They include financial sweeteners such as tax breaks, cheaper rentals and discounted electricity charges linked to volumes of production. However, the uptake of electric cars has been limited, compared to two- and three-wheelers which can better navigate the country’s congested cities and use battery packs that can be charged at home rather than at charging stations.