The U.S. President does not support Tesla building cars in India, the world's third-largest car market. Foreign brands, however, only compete for about a third of overall demand—and total EV sales are vestigial, growing to just 100,000 vehicles last year.

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.

A CLSA report has highlighted that with a reduced tariff rate of 15-20 per cent, Tesla price in India will be more expensive than its domestic competitors like Maruti Suzuki. The company will need to open a manufacturing unit in India to keep up with competition.