The Impact of Tesla's entry on India's retail EV Market is likely to be minimal.

Vinesh Gulati, Member, Executive Committee appointed at Federation of Automobile Dealers Associations (FADA), is analysing Tesla’s entry in India and visions that Tesla’s potential entry into India as a positive growth for India’s EV industry and manufacturing sector. 

According to him, if Tesla is provided government support and significant reduction in the import duties, then it could open gates for international EV companies like Tesla and could improve the supply chain, which will have huge benefits on the EV industry.

However, there is unlikely whether Tesla will introduce cars below Rs 30 Lakh. Gulati has addressed, “If Tesla hits the Indian Market, then it will completely disrupt the Indian EV industry, but if the cars are priced on a higher side, then they will disrupt the supply chain, not the retail side.”

Currently electric cars constitute less than 2% of the passenger vehicle segment, with a vision of achieving a target of 30% by 2030. To achieve this goal, it requires a major transition shift to EVs and Tesla’s entry into the Indian market would help in a fast and more cost-effective EV adoption. 

Thus certain incentives or significant duty reductions formulated for electric vehicles can benefit other manufacturers as well, creating a big impact on the automotive industry.

US President, Donald Trump has also announced plans to increase the tax rates imposed by the other countries on imports. However, the important concern is understanding the impact on these tax rates and how it will affect the automotive industry globally. 

The business relationship between India and US in the automotive sector is quite small, with very minimal vehicle exports from both sides, while some Indian manufacturers do export, but their volumes remain limited. However, the auto components industry plays a more significant role in this business, as there are a lot of confusions around the new tariffs, companies are closely analysing the change.

Following this, many companies are using alternative strategies like rerouting exports through their global factory units or assembly plants to reduce the potential impacts of the change in tariff rates. Currently, the automotive industry is in observing mode, accessing the potential results of the impact.