Why is Elon Musk's Tesla not interested in setting up EV factory in India? Is he under pressure from Donald Trump?

Why is electric vehicle (EV) manufacturer Tesla Inc not interested in setting up its factory in India despite incentives and a big market? This question became evident after Union Minister HD Kumaraswamy confirmed that the Elon Musk-owned car major would open two showrooms in India to have a retail presence. His statement can be interpreted as a candid admission that the government has not been able to lure investment despite incentives for global EV giants.

Elon Musk meets Narendra Modi

According to the Press Trust of India, a Tesla representative had participated in the first round of stakeholder discussions for the manufacturing scheme but "was not part of the second and third round". When Prime Minister Narendra Modi visited Washington in February, he met Elon Musk and the meeting was interpreted as the CEO's attempt to woo the Indian government. 

Tesla was interested in setting up a manufacturing plant in India. However, it shelved the plan temporarily in 2022 after the government insisted that Tesla make cars locally. It was contrary to the EV major that insisted on exporting the care to India first so that it could test demand. Elon Musk was scheduled to meet PM Modi in 2024 and announce an investment of $200 billion after the government came out with new EV policies. The meeting did not take place.

What will Tesla's Mumbai office do?

Immediately after the Modi-Musk meeting in Washington, Tesla advertised for its Mumbai office. It was considered that the EV automotive company will shortly announce its plans. But, Donald Trump's intimidation came instead. In what may be termed as a threat to Elon Musk, the U.S. president said that if Tesla opened new tab were to build a factory in India to circumvent that country's tariffs, it would be "unfair" to the U.S., in an interview with Fox News which aired on Tuesday.

Donald Trump threatens Elon Musk

Calling it "impossible" for Musk to sell a car in the South Asian nation, Donald Trump said, "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." India unveiled a new EV policy in March, lowering import taxes substantially to 15% if a carmaker invests at least $500 million and sets up a factory. Analysts believe, Elon Musk appears to have scrapped his decision to set up a manufacturing plant in India under pressure from the US President.