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India US Trade Deal: The interim trade agreement between India and America has brought great relief to American ICE vehicles like Harley-Davidson. However, Tesla has suffered a setback due to its exclusion from the EV segment. Model Y will still remain expensive due to high import duty. Know why Tesla's path in India seems difficult at the moment.
Tesla
India US Trade Deal: The interim trade agreement between India and the US announced on February 7 has brought relief to luxury American cars and Harley-Davidson bikes, but has been a disappointment for Elon Musk's Tesla. Under the agreement, import duty on US petrol cars (ICE) above 3000cc will be reduced from 110% to 30% (phased in over 10 years), while EVs are completely excluded. In this way, Tesla does not seem to be getting any help at the moment.
Tesla entered India by launching Model Y in July 2025. Model Y prices have remained high since then, as CBU import duty of 70-110 percent is applicable on EVs. Not exempting EVs in the agreement will not make Tesla's cars cheaper. The aim of the government is to protect the domestic EV players (Tata, Mahindra), which are investing heavily under the PLI scheme. These prices are still double that of America/China because duties and logistics are expensive. Tesla had demanded local manufacturing, but in 2025 the government had said that Tesla was not showing interest.
Tesla's path is difficult!
Tesla Model Y has been facing challenges since its launch in India. Launched in July 2025, the ex-showroom price of this EV is between ₹ 59-68 lakh, which is more than double that of the US due to 110% import duty (on CBU). This makes it costlier than locally assembled EVs like BMW iX1, Mercedes EQA in the luxury segment. Tesla is facing difficulties due to high prices, limited charging infrastructure, low brand visibility and local EV competition.
forced to give discount
Last year i.e. in 2025, only 227-263 units were sold (Vahan data). However, initially it received around 600 bookings. Later, more than half were cancelled. Out of about 300 imported units, 100 units are still unsold, due to which the inventory has increased. To boost sales, Tesla has offered a cash discount of up to ₹ 2 lakh on select variants from January 2026. Under the 'Switch and Save' scheme, offers like ₹ 3 lakh bonus on old ICE car exchange, 7-year loan on ₹ 6 lakh downpayment (EMI ₹ 49,000) and free wall charger are being given.
How will the work work?
Experts say that without local production (e.g. $500 million investment + manufacturing in 3 years) Tesla cars will remain a dream for common Indians. The agreement gave free entry to Harley-Davidson, but Tesla will have to wait again. There is still hope for discounts on EVs in the completed BTA (Bilateral Trade Agreement), but for now the prices will remain high.