Tesla only wants to start 2 showrooms in India, not interested in making cars: HD Kumaraswamy

Union minister of Heavy Industries H. D. Kumaraswamy on Monday said that Elon Musk-led Tesla is not interest in manufacturing cars in India and is only looking to set up two showrooms.

“Tesla... only wants to start two showrooms, they are not interested in manufacturing in India,” Kumaraswamy told reporters during a press conference.

However, a senior ministry official said the real intent of Tesla will be known once the applications for the government’s Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI) are opened. “If the company still feels like investing. What the minister is saying is the informal input that people have come and said,” he said.

The government’s EV manufacturing scheme slashes import duty to 15% from 100% for EVs with cost, insurance and freight value of $35,000 or more. Critics of the scheme argued that it was tailor-made for Tesla.

Kumaraswamy said that German carmakers Mercedes-Benz, Volkswagen, Skoda, as well as Hyundai and its sister company Kia have shown interest in manufacturing EVs under the new scheme.

The government on Monday notified guidelines for the Scheme to Promote Manufacturing of Electric Passenger Cars in India.

The initiative is touted to establish India as a premier global destination for automotive manufacturing by attracting fresh investments from automakers in electric vehicles.

Under this policy, car manufacturers must invest a minimum of ₹4,150 crore to establish a new electric vehicle (EV) production facility in India within a span of three years.

To encourage the global manufacturers to invest under the scheme, the approved applicants will be allowed to import Completely Built-in Units (CBUs) of electric cars with a minimum CIF value of $35,000 at reduced customs duty of 15% for a period of five years.

By the end of the third year, 25% of the components must be locally sourced, increasing to 50% by the fifth year. The customs duty exemption on EV imports will be capped at either the amount invested or ₹6,484 crore. If a company invests $800 million or more, it can import up to 40,000 EVs in total, with an annual cap of 8,000 units.

In case the investment under the scheme is made on a brownfield project, a clear physical demarcation with the existing manufacturing facility should be made, said the ministry of heavy industries. The expenditure incurred on new plant, machinery, equipment and associated utilities, engineering research and development (ER&D)would be eligible, it said.

However, the expenditure incurred on land will not be considered, the ministry said. "Buildings of the main plant and utilities will be considered as part of the investment provided it does not exceed 10% of committed investment," the ministry said, adding that the expenditure incurred on charging infrastructure would be considered up to maximum 5% of the committed investment.

The window for receiving applications will be open for a period of 120 days. Auto manufacturers with global group revenues of at least ₹10,000 crore are eligible to apply. Global investment companies with fixed assets of ₹3,000 crore are also eligible to apply.

Earlier in 2024, Musk-led Tesla signed a lease agreement for its maiden outlet in India. The electric vehicle maker is renting a 4,003-square-feet showroom in Mumbai’s Bandra Kurla Complex (BKC) business hub for five years. Tesla’s India unit will pay a rent of over ₹35.26 lakh per month for the space, as per CRE Matrix, a real estate data analytics firm.

Tesla is also hiring for at least 40 positions in India, including for a store manager role in Mumbai and several other roles in Pune.