After offering sweeteners to international EV players from March last year, India has finally got down on its knees admitting that the bait did not work in the case of Tesla. Kumaraswamy also noted that two Tesla showrooms will be set in India to keep retail operations alive in the country.

Other carmakers show interest
Speaking to reporters, Kumaraswamy said, "We have received an interest from other global automotive manufacturers such as Mercedes Benz, Skoda-Volkswagen, Hyundai Motor Company and Kia Motor Company for manufacturing electric vehicles in India. Such production plans would not include Tesla, he said.

A person involved in the discussions said a Tesla representative attended the first round of stakeholder talks but did not participate in subsequent meetings.
India lowered import taxes for EV makers last year, providing incentives to those that commit to investing $500 million and produce locally within three years. These developments are a result of Musk's earlier concerns over high import duties crippling Tesla's aspiration to for enter the Indian market.

Obstacles to Indian EV market
Over the years, Tesla has had several rounds of discussion with India. Initial forays into the market were shelved in 2022 after the Indian government said it wanted to see local manufacturing, a move in which Tesla, which wanted to start with exports to gauge demand, wasn't quite on board with.

Musk met Prime Minister Narendra Modi earlier this year in Washington DC and discussed the possibilities of deploying technology together, but the Indian electric vehicle space has its share of challenges. Sales of electric vehicles today represent less than 3 percent of total passenger vehicle sales and cheaper options are most popular.

Moreover, the nation’s poor road system and underdeveloped EV charging system could prove challenging for more premium brands such as Tesla. Currently, Tata Motors is the leader of the Indian EV market with over 60 per cent share, followed by MG Motors at 22 per cent.

Worldwide, Tesla has been under pressure from growing competition in China from local companies such as BYD. Its global sales fell to a three-year low in early 2025, after criticism of Musk’s relationship with the Trump administration, the role from which he said last week that he was departing.