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Can Musk Manage India?
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In today’s edition — India isn’t for beginners, do Elon Musk and Tesla know that?; US president Donald Trump’s tariffs won’t spare American consumers; and India’s renewable energy sector isn’t doing so well.
THE TAKE
India Is A Great Consumer Market, But Only For The Patient. Does Elon Musk Know That?
For all the breathless reporting on American car maker Tesla’s imminent entry is expected to send Elon Musk fans into raptures and global auto giants begging for mercy.
The total investment from Tesla at this point is only Rs 35 lakh a month. This is in the form of a showroom in Mumbai’s Bandra Kurla Complex.
Add one more showroom in Delhi and maybe it will be Rs 70 lakh a month. Because that is the cost of two showrooms of around 4,000 square feet each. That being the size of the Mumbai showroom, it is unlikely Delhi will spring any major surprises.
Even two-wheeler showrooms are bigger in many cases and most car dealerships are 5,000 square feet and upwards, including in big cities.
A 4,000 square foot space is not unusual; there could be even smaller ones, but this is not the giant killer that Tesla is being made out to be.
Not just that, its surprisingly low-intent, test-the-waters entry strategy is only revealing that Tesla can be a great engineering product but is not a company that wants to get its hands or feet dirty as other auto giants have done in their experiments with India.
Not surprisingly, people are speaking up.
India Isn’t Easy To Crack
Sajjan Jindal, chairman of the JSW Group that also owns MG Motors, has said that Tesla's entry into India’s electric vehicle (EV) market will not be easy, as the company is set to face stiff competition from domestic players like Tata Motors and Mahindra & Mahindra.
Speaking at an Ernst & Young 'Entrepreneur Of The Year' awards, Jindal highlighted, “Musk is not here. He is in the US. He can’t be successful in India! We Indians are here. He cannot produce what Mahindra can do, what Tata can do.”
Jindal did acknowledge Musk’s genius.
“He is super smart, no question about it. He’s a maverick, doing spacecraft and all that. He’s done amazing work, so I don’t want to take anything away from him. But to be successful in India is not an easy job.”
Jindal has only summed up what every business, domestic or international in India knows fully well. You could build cool electric cars and reusable rockets, but it takes that and more to succeed in India.
Or you get the President of the United States to bat for you. But even that may not be enough because a close-to-zero import duty demand, going by reports, is tough to offer.
Is Tesla Suited To India?
The Indian consumer can be idiosyncratic, and across product categories. In cars and two-wheelers, for instance, customers want to be sure there is after-sales service and a visible one.
And that the product in question does well on Indian roads. For example, it may not help that the ground clearance for some Tesla models might be a little low for Indian roads.
That can, of course, be engineered. Then, adding a loud horn, which is again an imperative for Indian vehicles and roads.
But all that means more customisation and thus cost.
It will take more than just picking vehicles off an assembly line in Berlin or wherever and putting it on a ship bound for a Mumbai port.
Multinationals who have invested in India in the long term have spent time and effort in understanding the market and then succeeded.
And they have failed too.
The likes of Ford and General Motors have come and gone, though Ford is now returning.
But other car manufacturers who have had patience have done well, though within their own cycles, including the Europeans, Japanese and Koreans.
Perhaps Musk’s genius has allowed him to see what others have taken longer to understand.
India is a great consumer market, but only for the patient..
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JANUS VIEW
Trump’s Reciprocal Tariffs Will Hit Indian Trade—And American Consumers Too
In his long address to the US Congress on Tuesday, president Trump once again named India as a major tariff offender and reiterated his intention to deploy a regime of reciprocal tariffs against India. How reciprocal tariffs would affect India depends on whether the tariffs taken up apply to classes of goods or to specific items. If they apply to classes of goods, say fruit, rather than disaggregating fruit into apples, which India does not export to the US, and oranges, which India does export to the US, reciprocal tariffs could, indeed, curtail Indian exports. Indian officials have time till April to negotiate how reciprocal tariffs would be designed.
However, in the case of sectors such as automobile components, the fear of American reciprocal tariffs doing much damage to Indian exports might be exaggerated. It is not India alone that is being subjected to tariffs. Other major producers of automobile components are also being slapped with tariffs, whether China, Mexico or South Korea.
If US car assembly lines require components from outside America, they have to get them, even if they have to bear the higher import duties placed on them by the US government. It is only if some producers manage to route their exports through third countries that do not face any punitive American tariffs, even as Indian exporters are left flatfooted, would there be an actual dent in Indian exports. Otherwise, the net effect of the Trump tariffs would be to increase the cost of American cars for American consumers.
CORE NUMBER
18.99 lakh
This is the total number of vehicles sold in India in February, marking a 7% decline from 20.46 lakh units a year earlier, according to the Federation of Automobile Dealers Associations (FADA), Business Standard reported. Passenger vehicle sales fell 10%, while two-wheelers dropped 6%. FADA President C S Vigneshwar noted that demand weakened across all segments, with dealers raising alarms about manufacturers pushing excess inventory, risking oversupply and financial strain. Historically, such slowdowns are worrying for both automakers and retailers, especially with weak consumer sentiment, tighter financing, and inflation dampening purchase decisions despite upcoming festival-driven hopes.
FROM THE PERIPHERY
—♻️ After an initial boom in renewable energy tendering and allotments in India, the sector appears to be struggling, with weak demand, cancellations and delays in power agreements, according to a report by the Institute for Energy Economics and Financial Analysts (IEEFA). Though the Solar Energy Corporation of India (SECI) issued a record number of 73 GW of renewable energy tenders in 2024, around 8.5 GW went undersubscribed, primarily due to complex tender structures and infrastructure delays. Power developers argue that the government’s strict mandate to meet the 50 GW target each year puts pressure on tendering agencies to issue bids without securing and planning for offtake agreements. The report recommends the state to focus equally on all stages of the process to combat this issue and meet India’s target of 500 GW of non-fossil power capacity by 2030.
—🛢️ India has spent EUR 112.5 billion (Rs 1.5 lakh crore) on Russian crude oil since the Ukraine war began, according to the Centre for Research on Energy and Clean Air (CREA). Russia earned EUR 835 billion from fossil fuel exports, with China leading purchases at EUR 235 billion, The Economic Times reported. Traditionally reliant on Middle Eastern oil, India ramped up Russian imports after February 2022 as Western sanctions and European bans made Russian crude significantly cheaper. This shift made Russia India’s top supplier, with discounts reaching $8-10 per barrel in 2023-24. However, US sanctions on Russian tankers and insurers have forced India to reject sanctioned cargoes, while discounts have now shrunk to $3-6, potentially increasing India’s oil import costs.
— ️🌎 The Ministry of External Affairs (MEA) says that if you’re born after October 1, 2023, the only document you can submit as proof of your birthdate while applying for a passport is your birth certificate, according to a report published in Business Standard. This updated requirement, however, doesn’t impact those before October 2023, who can still submit other documents like PAN Card, a driving license, a school certificate or a government service record as proof. As well, the government has introduced colour-coded passports for different categories of individuals: red for diplomatic passport holders, white for government officials and blue for everyone else. The new rules also remove parents’ names from passports, to accommodate children of single parents and those who are estranged from their families.
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✍️ Zinal Dedhia, Salman SH | ✂️ Rohini Chatterji | 🎧 Joshua Thomas