Tesla Factory In India Will Be Unfair To The US: Trump
Elon Musk-owned Tesla Inc. has started hiring staff in India, indicating an imminent entry into our market. Looks like it isn’t just India that the move has made headlines in. The US President Donald Trump has come up with an unpleasant remark on the same. He called Musk’s decision to build a Tesla factory in India ‘very unfair’. He is clearly upset with the decision and there are probably reasons for it.
Trump’s Reaction To Tesla’s India Plans
Trump is unhappy with Elon Musk’s decision to build a factory in India. Commenting on the same, he said ” If he builds a factory in India, that’s ok, but that’s unfair to us. It’s very unfair.” The Indian foreign ministry is yet to respond to this comment.
Previously, he had called out India’s high duty on cars during Prime Minister Narendra Modi’s visit to the United States. The duo further agreed to work towards an early trade deal so that the issue is resolved. It is in fact, the same high tax slabs that’s finally made Musk decide to build a plant here.
Tesla And The Indian Tariff
Tesla could have chosen the CBU route for selling their cars in the Indian market if it were not for the country’s sky-high import duties. For fully imported EVs, the tax could go up to 100%. This will not let the company have fair pricing for its products, let alone them being competitive. These, in a way, protect Indian EV players like Tata Motors and Mahindra.
Musk has long criticized India for its high-set tariff. Discussions around lowering the taxes have been live for quite some time, and Prime Minister Narendra Modi even met the Tesla CEO during his US visit. The meeting lasted for almost an hour, and the PM’s official handle said:
“We discussed various issues, including those he is passionate about, such as space, mobility, technology, and innovation. I talked about India’s efforts toward reform and furthering Minimum Government, maximum Governance.”
Indian Government Lowers The Tax
In March this year, the government of India announced a major tax relief, with a catch. The import duties on EVs which previously stood at 100% would now be reduced to 15%. The catch here is that the manufacturer should be required to make an investment of at least Rs 4,150 crore. There is no cap on the maximum investment that can be made.
That’s not all. The manufacturer will also have to set up plants and start commercial local production within 3 years. Further, they should achieve at least 25% localisation in the first three years and 50% by the 5th.
“This will provide Indian consumers with access to the latest technology, boost the Make in India initiative, strengthen the EV ecosystem by promoting healthy competition among EV players leading to high volume of production, economies of scale, lower cost of production and trade deficit.” said the Ministry of Industry and Commerce.
Now, this is what Tesla is trying to achieve. Musk plans to set up the Tesla factory in Maharashtra and build locally so that he can circumvent India’s tariffs. Plus, India’s growing affinity for EVs is not something he can be blind to, especially at a time when the company’s global sales are witnessing a slide of nearly 1% (compared to 2023 numbers). Having a strong presence in the world’s third-largest auto market will be of help in making things better for Tesla.
Trump On India And Its Tariff
The US president in a recent statement, said that it is ‘impossible‘ for Elon Musk to sell a car in India. ‘Every country in the world takes advantage of us, and they do it with tariffs… It is impossible to sell a car, practically, in, as an example, India‘- he added. Previously, he referred to our country as a ‘tremendous tariff maker’He said that is is very difficult for foreign automotive manufacturers (both high-end bikes and cars) to do business in India.
As reported by PTI, Trump, in a major economic policy speech, said: “The biggest (tax) charger of all is India”. He even issued a threat of imposing reciprocal tariffs on Indian products in the US, if a sensible revision weren’t made on India’s import duties. He said:
“We’re not the foolish country that does so badly. You look at India, very good friend of mine, Prime Minister (Narendra) Modi, you take a look at what they’ve done, 100 per cent tax on a motorcycle. We charge them nothing. So, when Harley sends over there, they have a 100 per cent tax. When they (India) send in, they make a tremendous number of motorcycles, when they send them in, no tax. I called him. I said it’s unacceptable” He was referring to the high duties imposed on Harley Davidson motorcycles.
“If I said 25 per cent, they’d say, ‘Oh, that’s terrible.’ I don’t say that anymore… because I say, ‘Whatever they charge, we’ll charge.’ And you know what? They stop,” Trump explained on Fox News.
Trump Wants American Auto Giants Back In The US!
Since he rose to power, Donald Trump has announced major financial policies and reworks. He is trying his level best to make life easier for American automakers in ‘high-tariff’ countries like India. Further, he wants to bring automotive manufacturing back to America. This means that the Trump government is less amenable to foreign investments. Now you know why Tesla setting up a factory, making major financial commitments and investing billions in local sourcing and supply chain are all concerns for the US government…