Tesla's India entry puts spotlight on trade pact with US
President Donald Trump has already fired fresh salvos on a host of countries in the form of tariffs with Brazil hogging the headlines with a hefty 50 per cent. Peace has been made with China after the US realised that the latter was no easy pushover. Likewise, in the case of India, a separate deal will be finalised shortly where sectors like automotive will also feature in it.
The US has made known that the reciprocal tariffs will kick in from August 1 and a host of countries have already been identified for levies. India and a handful of others have been exempt since they will be entering into exclusive pacts with the US.
It is here that Tesla could benefit if import duties on completely built units from the US to India are slashed to levels of under 50 per centwhich will be lower than prevailing levels. Given that India's GST levels on electric vehicles are just 5 per cent, Tesla's CEO,
Elon Musk
, will have every reason to smile. The final cost of his Model Y will then be in the range of $60,000 (around ₹55 lakh or thereabouts).
There is no question that Tesla and Musk still have tremendous appeal across the affluent class in India. However, that does not mean that sales will take off with a bang from Day 1.Industry observer
The Tesla aura
Even if the India-US trade pact does not provide for a dramatic slash in CBU levies, Tesla may still choose to partially subsidise its range in order to draw more customers. As an industry observer says, the company is aware that there is a certain aura it has that could work out to its advantage in the short-term.
However, it will eventually have to walk the talk in terms of ensuring fast-charging infrastructure as well as timely after-sales service. 'There is no question that Tesla and Musk still have tremendous appeal across the affluent class in India. However, that does not mean that sales will take off with a bang from Day 1. Sure, there will be some initial euphoria in Mumbai and Delhi but this will not last forever,' said the observer quoted earlier.
There is also no question that the massive halo that enveloped Tesla a few years ago has dimmed to an extent now thanks to the fact that it is no longer seen as the invincible EV brand. Today, the Chinese have taken over that slot with brands like BYD surging ahead in the electric vehicle race. Automakers from China are now pulling out all the stops in offering top-class design and features at competitive prices, a heady mix which Tesla and other brands from the West are unable to replicate.
As an automotive CEO wryly added, 'If Chinese automakers had been allowed to invest here in India, they would have literally had a field day. Indians love the latest features in their cars and this is where brands from China would have left others way behind.' Right now, there is no love lost between India and China thanks to the border clashes which broke out in 2020 and relations have taken a nosedive since then.
Rough run
Tesla has also had a rough run in recent times thanks to the initial bromance between Trump and Musk which soured later and led to a falling out subsequently. The Tesla CEO's new avatar as a politician antagonised buyers in Europe who gave the cold shoulder to his cars and their sales have been falling dramatically across Germany, France, Italy and a host of other countries.
It is unlikely if similar sentiments will extend to India where Musk continues to be a poster boy for EVs even while his company struggles against stronger Chinese rivals. On the contrary, industry sources believe that policymakers in India are still smitten by the Tesla CEO which explains why they literally rolled out the red carpet for him in the form of a new EV policy.
Even this was no enough to attract Musk who is now determined not to produce cars in India and has opted to have them imported instead. With the new trade policy between India and the US also expected to be more liberal towards CBU imports, he will be happy sticking to this route with a handful of stores spread across India for the rich and famous who still swear by the Tesla brand.
The big question still remains…will Tesla end up being a huge success story in India or will the magic fade fast? After all, Indians are fastidious when it comes to price and features along with levels of customer support for the cars. There will also be concerns about resale value which possibly explains why many prefer the lease option for EVs instead of outright ownership.
Pioneering status
According to an automobile executive, Tesla derives its halo 'equally from its pioneering status' of creating a new category in the market coupled with the 'genius' of Elon Musk. He said BYD was getting increasing recognition for its superior technology even while the 'opaqueness' of Chinese pricing 'casts a shadow' on the authenticity of its competitiveness.
Will Tesla then stay the course in India? The executive was of the view that the brand's status symbol in India of being the first few customers to own a car would actually subside very quickly. This was because of superior electric offerings from the stables of companies like BMW for instance. 'So, these are emotional more than rational purchases of the wannabes,' he added.
The purchasing pattern in India, like the rest of the world, would also follow a layered route with different categories like innovators and early adopters leading the way while the more circumspect would follow after gauging market reaction. This is typical for all products and perhaps a little longer for those with hefty price tags.
By the end of the day, added the executive, customers are comfortable with products that are represented by 'great brands, look great, perform reliably and durably, are backed by good service, feel comfortable and offer great value for money, including resale value'. When it comes to a new beast like electric, the buying process could quite naturally take a more cautious and introspective route since big bucks are involved.
I just don't understand why India is so obsessed with Elon Musk. His coming to India is not going to make a difference except for a few hundred people who will buy a Tesla.An Auto Industry Leader
On a roll
Before his entry into politics and during the period when he was literally on a roll, Musk had everyone eating out of his hand. Every single statement hinting at an India entry was met with politicians across the landscape literally imploring him to set up shop in their individual States.
At a national level too, the EV policy was tailored to meet the Tesla CEO's whims and fancies except that he refused to bite the bait and play ball. These levels of hero worship irked some industry leaders who wondered what the big fuss was about when there were other automakers who were also doing a great job in the electric space.
One of them told this writer in no uncertain terms, 'I just don't understand why India is so obsessed with Elon Musk. His coming to India is not going to make a difference except for a few hundred people who will buy a Tesla. If he wants to come to India, he has to come on our terms and not on his (terms).'
Affordable imports
The only difference this time around is that despite his recent falling out with the US President, Musk will still enjoy the backing of a trade deal with India which will clearly help him at least from the viewpoint of more affordable CBU imports. Assuming this does happen, other carmakers in India will also seek similar concessions given that they have invested in EVs.
This is where free trade agreements with Europe and ASEAN may just pave the way for CBU import even though there will be a cap on their numbers. It will also be interesting to see if an India-US trade pact will change the business models of companies like Ford which have already announced their comeback plans. Will this also encourage Harley-Davidson (a favourite reference point for Trump) to have a rethink on India beyond the current alliance with Hero MotorCorp?
Tesla has thrown its hat into the India ring finally. What this will mean for India's auto sector and the tariff scenario remains to be seen. Doubtless, the White House will be watching the turn of events carefully and given Trump's unpredictable nature, India will play its cars very safely.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Hindu
11 minutes ago
- The Hindu
Why is Trump taking aim at BRICS?
The story so far: U.S. President Donald Trump's threat to impose 10% tariffs on members of the BRICS grouping that held a summit in Rio de Janeiro this week is the latest in a series of similar threats. Why is BRICS in Mr. Trump's cross-hairs? Even before he was sworn in as U.S. President for the second time, Donald Trump had made it clear that he saw the BRICS grouping as 'anti-American' and a threat to the dollar that he needed to neutralise. On November 30 last year, Mr. Trump said the U.S. would require BRICS members to commit that they would not create a new BRICS common currency, 'nor back any other currency to replace the mighty U.S. dollar', threatening 100% tariffs on them. It's a threat he has repeated several times since. Mr. Trump's irritation appears to stem from BRICS declarations in South Africa in 2023 and Russia in 2024, where members that now also include Egypt, Ethiopia, Indonesia, Iran and the UAE, discussed a BRICS Cross-Border Payments Initiative that aims to facilitate trade and investment within BRICS countries using local currencies and other mechanisms. The initiative built momentum due to the problems Western sanctions on Russia have meant for trading partners in the Global South. What has the U.S. threatened to do? Last Sunday (July 6, 2025), just as BRICS leaders gathered in Rio for the 17th BRICS summit, Mr. Trump said in a social media post that any country aligning with BRICS would face a 10% added tariff. The penalty was 'just for that one thing' of being a member, Mr. Trump said later. It is unclear why the tariff rate was dropped to a tenth from the original threat of 100%, and even whether Mr. Trump will go through with the BRICS tariffs along with other reciprocal tariffs planned for August 1. But there seems little doubt that Mr. Trump wants BRICS de-fanged. 'You can tell the (U.S.) President is (upset) every time he looks at the BRICS de-dollarisation effort…(and) Rio didn't help,' said Steve Bannon, Trump's former White House chief strategist, according to Politico magazine. Editorial | Building resilience: On the 17th Summit of BRICS emerging economies In addition, the Trump administration has slapped 50% tariffs on Brazil after accusing President Lula da Silva of a 'witch-hunt' against former Brazilian President Jair Bolsonaro, who faces charges of attempted coup. It has also imposed 30% tariffs on South Africa after accusing it of unequal trade, as well as expressing concerns over the treatment of Afrikaners (White South Africans). Republican Senators close to Mr. Trump also plan to bring a bill called the Sanctioning Russia Act of 2025 that seeks to place 500% tariffs on imports of oil and sanctioned Russian products, which would hurt Russia, as well as India and China, its two biggest importers. Are Mr. Trump's concerns valid? Mr. Trump's concerns about de-dollarisation have been denied by practically every BRICS member. The South African Ministry of Foreign Affairs issued a detailed statement explaining why the BRICS attempt to use national currencies within the grouping is not the same as replacing the dollar as the global standard. While anti-U.S. rhetoric of some BRICS leaders has been harsh, the wording of the BRICS Rio declaration 2025 issued this week does not directly challenge the U.S. or the dollar. In the operative Paragraph 50, the leaders said they resolved to task ministers of finance and central bank governors 'to continue the discussion on the BRICS Cross-Border Payments Initiative and acknowledge the progress made by the BRICS Payment Task Force (BPTF) in identifying possible pathways to support the continuation of discussions on the potential for greater interoperability of BRICS payment systems.' Paragraph 13 expressed 'serious concerns' over the rise of unilateral tariff and non-tariff measures but didn't name the U.S. Where does India stand? The Modi government, hopeful of clinching a Free Trade Agreement with the U.S., has strenuously objected to Mr. Trump's categorisation of the BRICS as 'anti-American'. Also read: India will give a 'new form' to BRICS grouping in 2026: PM Modi In a parliamentary response on December 2, 2024, the MoS (Finance) Pankaj Chaudhury made it clear that the U.S. allegations referred to a report prepared by Russia during its chairmanship of BRICS, where it had spoken of 'possible alternatives relating to cross-border payments' and 'leveraging existing technology to find an alternative currency'. He added that the report was only 'taken note of' by other BRICS members, not adopted. In March 2025, External Affairs Minister S. Jaishankar was more categorical, saying there is no Indian policy to replace the dollar. He conceded, however, that BRICS members had differences, and there was no unified position of the grouping on the issue.
India.com
17 minutes ago
- India.com
As Nimisha Priya's execution nears, bad news from this country where three Indians are sentenced to death, country is..., Indian govt...
(Representational image: New Delhi: Indian nurse Nimisha Priya has been sentenced to death in a murder case in Yemen and she will be executed on July 16 as per the latest reports. Despite the efforts of Nimisha's family, the Indian government and many organizations, the possibility of Nimisha's execution being postponed seems very low. Amidst Nimisha's case, a court in Indonesia has also sentenced three Indians to death. Who are the three Indians? Three Indians have been sentenced to death in Indonesia after being found guilty of drug trafficking. The country's High Court has also upheld the conviction of all three. These three Indians sentenced to death in Indonesia are Raju Muthukumaran, Selvadurai Dinakaran and Govindasamy Vimalkandan. All three are currently in jail. What does India say? The Indian Ambassador to Indonesia, Sandeep Chakraborty, has formally called for a re-investigation into the case. Sandeep Chakraborty said that we have demanded a resumption of the investigation. All witnesses, including the captain and crew of the ship, should also be thoroughly investigated. Sandip Chakraborty said, 'We have faith in the Indonesian judicial system. We believe that due process should be followed in the investigation. We have seen many discrepancies in the investigation. All evidence, including mobile phone records, has not been examined. Death penalty is a harsh decision and this punishment can be given only in the rarest of rare cases. In such a situation, this case should be investigated again.' What is the case? Indian citizens, Raju Muthukumaran, Selvadurai Dinakaran and Govindasamy Vimalkandan were arrested in July last year from a Singapore-flagged ship near Karimun Island in Indonesia's Riau Islands. It was claimed that all three were smuggling narcotic drugs. A case was filed against all three and the District Court of Tanjung Balai Karimun found them guilty and sentenced them to death. The high court has also upheld the death sentence of these three. All three may be executed in the coming days. On the other hand, India's diplomatic mission has accused Indonesian authorities of negligence from arrest to trial proceedings. The Indian government is putting pressure through its diplomatic channels for legal and humanitarian assistance for its three citizens.
United News of India
29 minutes ago
- United News of India
Youth power, country's greatest capital: PM Modi's message to new appointees
New Delhi, July 12 (UNI) Emphasising the unmatched strengths of "India's demographic and democratic foundations", Prime Minister Narendra Modi today said that youth power is country's greatest capital, and the government is steadfast in its efforts to convert this capital into a catalyst for long-term prosperity. "India, with the world's largest youth population and the largest democracy, holds unique potential to shape the future both domestically and on the global stage. This vast youth power is India's greatest capital, and the government is steadfast in its efforts to convert this capital into a catalyst for long-term prosperity," he said while addressing the Rozgar Mela and distributed more than 51,000 appointment letters to newly appointed youth in various Government departments and organisations via videoconferencing here. Addressing the gathering, he emphasised that today marks the beginning of new responsibilities for these youth in different departments of the Government of India. He congratulated the young individuals on beginning their service in various departments, saying that despite different roles, their common goal is national service, guided by the principle of 'Citizen First.' The Prime Minister also emphasised the "unmatched strengths of India's demographic and democratic foundations." 'Just two days ago, I returned from a visit to five countries. In every nation I visited, the strength of India's youth echoed strongly. The agreements signed during this tour will benefit Indian youth both within the country and abroad,' Modi said. He further said that various agreements signed during this tour on critical sectors such as defence, pharmaceuticals, digital technology, energy and rare earth minerals will create far-reaching benefits. 'These initiatives will not only strengthen India's global economic standing but also generate meaningful opportunities for young Indians in both manufacturing and services,' he said. Addressing the evolving landscape of employment, the Prime Minister highlighted that the nature of jobs is undergoing rapid transformation in the 21st century. Emphasising the importance of innovation, startups and research, he spoke of the growing ecosystem in India that empowers young people to dream big. He shared his personal pride and confidence in the new generation, expressing joy at seeing youth stepping forward with ambition, vision and a strong desire to create something new. Stating that his government is also focusing on creating new employment opportunities in the private sector, he said that the government has approved a new scheme called the "Employment Linked Incentive Scheme". Under this scheme, the government will provide Rs 15,000 to young individuals who get their first job in the private sector, he informed. 'In other words, the government will contribute to the first salary of their first job. For this, the government has allocated a budget of approximately Rs one lakh crore. This scheme is expected to help in the creation of about 3.5 crore new jobs,' Modi added. The Prime Minister stressed on the transformative power of India's manufacturing sector in driving national growth, generating employment and accelerating India's journey towards becoming the world's third-largest economy. The Prime Minister noted that in recent years, there has been significant strengthening of the 'Make in India' initiative. Through the PLI (Production Linked Incentive) scheme alone, more than 1.1 million jobs have been created across the country. 'Today, electronics manufacturing in India is worth nearly Rs 11 lakh crore, marking more than a fivefold increase over the past 11 years. Earlier, there were only two to four units manufacturing mobile phones in the country. Today, India is home to nearly 300 units related to mobile phone manufacturing, employing lakhs of young people,' he stated. The Prime Minister also spoke of India's rise as a global leader in defence manufacturing, with output exceeding Rs 1.25 lakh crore. Modi praised India's emergence as the largest locomotive producer in the world, and the country's strong export performance in locomotives, rail coaches and metro coaches. The automobile sector, he added, has attracted USD 40 billion in FDI in just five years, resulting in new factories, new job opportunities, and record vehicle sales. The Prime Minister underscored the far-reaching impact of India's welfare initiatives, citing a recent International Labour Organisation (ILO) report that confirms that over 90 crore Indian citizens have been covered under government welfare schemes over the past decade. These schemes, he noted, are not limited to welfare benefits alone but have played a crucial role in generating large-scale employment, particularly in rural India. The Prime Minister elaborated on flagship programmes such as the PM Awas Yojana, under which four crore permanent houses have been built and three crore more are under construction. 'The PM Surya Ghar Muft Bijli Yojana, which offers over Rs 75,000 per household for rooftop solar installations, is reducing household electricity bills and creating job opportunities for technicians, engineers, and solar panel manufacturers. Namo Drone Didi has empowered rural women by training them as drone pilots,' Modi added. The Prime Minister pointed that the country is also progressing with its mission to create three crore Lakhpati Didis, and 1.5 crore women have already achieved this milestone. Listing out various schemes like Bank Sakhi, Bima Sakhi, Krishi Sakhi and Pashu Sakhi that have enabled women to find sustainable employment, he mentioned that the PM SVANidhi scheme has extended formal assistance to street vendors and hawkers, bringing millions into mainstream economic activity. The Prime Minister emphasised that it is the impact of these numerous schemes that, in just the past 10 years, 25 crore people have come out of poverty. 'Without employment opportunities, such a transformation would not have been possible. This is why today, major global institutions like the World Bank are praising India. India is now being counted among the top nations in the world with the highest levels of equality,' Modi stated. The Prime Minister described the current phase as a Mahayagya of development, a national mission dedicated to poverty eradication and employment generation and called on the country's youth and new government appointees to take this mission forward with renewed energy and dedication. The Prime Minister also invoked the guiding ethos of 'Nagrik Devo Bhava' of treating every citizen as divine and extended his heartfelt congratulations and best wishes to the new appointees for a bright and meaningful future in public service. UNI AAB ARN SS
