U.S. President Donald Trump said it would be ‘unfair’ to the U.S. if Elon Musk (in picture) did decide to build a factory in India. File
| Photo Credit: AP

U.S. President Donald Trump has said that if Tesla 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 (February 18, 2025).

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Mr. Trump called out India’s high duty on cars during Prime Minister Narendra Modi’s visit to the U.S. last week but agreed to work towards an early trade deal and resolve their standoff over tariffs.

Tesla’s CEO Elon Musk has long criticised India for having import tariffs of around 100% on EVs which protect local automakers such as Tata Motors in the world’s third largest auto market, where EV adoption is still at a nascent stage.

Mr. Trump said it is “impossible” for Mr. Musk to sell a car in the South Asian nation.

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“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 said.

India’s government in March unveiled a new EV policy lowering import taxes substantially to 15% if a carmaker invests at least $500 million and sets up a factory.

Reuters reported on Tuesday that Tesla has selected locations for two showrooms in the Indian cities of New Delhi and Mumbai, and posted job ads for 13 mid-level roles in India. It does not currently manufacture any vehicles in India.

Mr. Trump said it would be “unfair” to the U.S. if Mr. Musk did decide to build a factory there.

“Now, if he built the factory in India, that’s okay, but that’s unfair to us. It’s very unfair,” Mr. Trump said in the interview.

Foreign Ministry did not immediately respond to a request for comment.

Mr. Trump’s plans for reciprocal tariffs on every country that taxes U.S. imports have raised the risk of a global trade war with American friends and foes.

Tesla has resumed its search for showroom space in the national capital. File
| Photo Credit: Reuters

Elon Musk’s Tesla has resumed its search for showroom space in the national capital, two sources told Reuters, in the first sign it is rethinking entering the Indian market after putting its investment plans on hold earlier this year.

Mr. Musk said in April he would meet Prime Minister Narendra Modi during a trip where he was to potentially announce an investment of $2-3 billion in India. However, he called off his visit at the last moment after Tesla decided to sack 10% of its staff amid falling sales.

Tesla, which had paused its search for a showroom in India in recent months, is now in early-stage talks with DLF to help secure space in the capital region, said the two sources, who have direct knowledge of the situation.

A third source said it is not certain that Tesla’s talks with India’s biggest property developer will lead to a deal and the electric vehicle giant is also in discussions with others.

Tesla and DLF did not respond to requests for comment.

One of the sources said Tesla is looking for 3,000 to 5,000 square feet (280-465 square metres) to create a consumer experience centre as well as a space three times larger for its delivery and service operations.

Tesla is evaluating multiple locations including DLF’s Avenue Mall in southern Delhi and the Cyber Hub office and retail complex in nearby Gurugram city, the source added.

Foreign retailers including Japan’s Uniqlo, Spain’s Mango and Britain’s Marks and Spencer also have outlets in the Avenue Mall, where Tesla is looking to secure an 8,000 square feet showroom space, the second source said.

Tesla’s search is still “exploratory” and nothing has been finalised, the first source said.

It was not immediately clear whether Tesla will consider importing cars at the tax rate of as high as 100% or if it will make investment commitments under India’s new policy, which would allow it to import certain EVs at a lower rate of 15%.

After Tesla did not deliver on earlier investment plans, India’s government is trying to relax certain provisions of its policy to attract automakers such as Hyundai Motor and Toyota which have expressed initial interest.

India’s EV market is small, making up about 2% of total car sales of 4 million last year, but the government wants to increase the share to 30% by 2030.

Tesla’s showroom hunt comes as Musk’s Starlink is also considering entering India after winning a lobbying battle against billionaire Mukesh Ambani over how New Delhi should allocate spectrum for the service. (Reporting by Aditi Shah and Aditya Kalra; Editing by Alexander Smith)