Trump Tariff War: India will make Trump happy by messing with China, this way Tesla's power will increase!

Trump Tariff War: Amid the discussions of Donald Trump's return, the debate on global trade policy has started again. If we look at Trump's reciprocal tariff in Asian countries, India's situation is much better than other countries. An average of 26% tariff has been imposed on India, while this rate is much higher on countries like China, Pakistan, Bangladesh and Vietnam. Trump has threatened to impose tariffs up to 50% on China in particular.

This difference is not without reason. India is an emerging market that is needed not only by China, but Europe and America also understand its importance very well. This is the reason why America, and especially Trump's close aide Elon Musk's company Tesla, wants to make its strong presence in India.

Tesla's entry in India and BYD's departure

By getting Tesla to enter India, America wants to strengthen its foothold in Asian markets. Its second objective is also to reduce dependence on China. Rejecting the investment proposal of China's largest e-car company BYD in India is being considered a part of this strategy.

India's Commerce Minister Piyush Goyal has clearly stated that India will have to allow investment keeping in mind its strategic interests. He also said that at present there is no place for BYD in India. Earlier, big Chinese companies like Great Wall Motors have also exited India due to regulatory hurdles.

Press Note 3 and strictness on China

Under Press Note 3, the government has made strict scrutiny of investments coming from border-sharing countries mandatory. This has a direct impact on China, whose companies' ownership structure, government links and non-market economy model are suspected by India.

Companies like BYD are not able to penetrate deeply into the Indian market, as government agencies are looking at them as receiving indirect subsidies and under policies that distort competition.

Tesla's India plan

Tesla has almost completed preparations for entry into India. Along with opening showrooms in Mumbai and Delhi, the company has also started recruiting sales, service and delivery staff. Tesla is initially looking at contract manufacturing, but building a full-fledged gigafactory in India is part of its long-term plan.

The estimated cost of a Tesla unit in India is $2-3 billion, which is much lower than the cost of gigafactories in Berlin and Texas. Cheap land in India and labor costs of $2-5 per hour make this investment more attractive.

India's EV policy and the role of domestic companies

India is on its way to becoming a global hub for EV manufacturing, but the tariff structure is still high. Entry barriers for foreign companies in India are high compared to 2.5% tariffs for the US, 10% in Germany, and 25% in China.

Domestic manufacturers like Tata Motors and Mahindra & Mahindra want the government not to give tariff exemptions to foreign companies so that they maintain their competitive position in the domestic market. India's new EV policy provides for some duty exemptions, but that is not enough for companies like Tesla. Therefore, the company may initially move ahead on the model of contract manufacturing.