Musk Shaking Up India's Auto, Broadband Market

Elon Musk is back in India with Tesla and Starlink. Tesla's entry was shelved twice over the last 2-3 years.

- GURBIR SINGH

The messaging was: we are not interested in a fire-walled market. With the recent tariff talks between Donald Trump and Prime Minister Modi, news of hirings in India, and the first Tesla shipments coming in a few months, the buzz is back on the street.

Trump and Musk have been at pains to point out India has the highest tariffs in the world at 100%. The fact is it is even higher. The Basic Customs Duty (BCD) on fully built EVs priced above $40,000 is 70%. Add to that the Agri and Infra Cess of 40% and the effective import duty on Tesla cars is 110%.

Around mid-2023, the Union government set about making things easier for importing EVs with a view to embracing the green revolution. A new EV policy was cobbled to allow import of luxury electric cars with a low duty of 15%.

As is the wont in Indian policy-making it comes with heavy ifs and buts. The caveat in this case was to qualify for the lower import duty, the foreign company must set up local manufacturing with a turnover of at least ₹2,500 crore, and invest a minimum of $500 million. This queered the pitch for foreign auto makers, and from Elon Musk there was loud silence.

Is Tesla a Threat?