Musk Saga Shows Perils of India’s Trade-by-Exception Approach

By Govindraj Ethiraj

It is tempting to dive into Elon Musk’s latest public spat with the Indian government over its reluctance to authorise his Starlink satellite broadband service. 

Yet, doing so misses the forest for the trees. 

Musk’s current frustrations are merely the predictable fallout from New Delhi’s poorly scripted dealings with him more than two years ago. 

The entire saga should serve as a stark object lesson in the perils of economic negotiation by exception and the cost of trying to outsmart global trade dynamics.

The Tesla Red Carpet

India’s trade policy has rarely been described as nimble. 

For decades, it has penalised its own consumers through prohibitively high tariffs. 

Until around 2015, it appeared that tariffs were headed down and trade would further liberalise. 

Instead, the opposite occurred. 

Tariffs began to creep upward again, a reverie broken only when US President Donald Trump imposed penal tariffs on Indian exports in April 2025, jolting New Delhi’s trade mandarins awake.

Enter Elon Musk. 

In June 2023, the billionaire famously declared himself a "fan of Modi" and proclaimed that India possessed "more promise than any large country in the world." 

He assured reporters that Tesla would enter India "as soon as humanly possible." The market was soon buzzing with reports of an impending $24,000 Tesla tailored for India.

But there was a catch. Tesla wanted to test the waters by exporting cars to India first, and Musk understandably balked at the country's punitive 110% import duties. 

A protracted back-and-forth ensued. For a year, it appeared Tesla might actually bend New Delhi to its will, raising the hackles of established domestic and multinational automakers, from the likes of Tata and Toyota to Hyundai and BMW, who rightly protested the prospect of an unfair advantage.

Eventually, in March 2024, the government unveiled a bespoke policy: it lowered import taxes on specific electric vehicles for automakers willing to commit at least $500 million and commence domestic manufacturing within three years. 

The red carpet had been explicitly rolled out for Tesla.

Yet, Musk, perhaps sensing that the addressable market for his vehicles in India was narrower than projected, began to backtrack. 

In April 2024, citing "very heavy Tesla obligations," he abruptly canceled a planned trip to meet Prime Minister Modi. Instead, he landed in Beijing the same week.

The promised mega-investment never materialised.

Underwhelming Indian Debut

When Tesla finally did enter the market between July and August 2025, it was with a whimper, not a bang.

It opened two showrooms in Mumbai and Delhi and began selling fully imported cars. 

Thus far, Tesla has sold a grand total of around 1,000 vehicles in India, all Model Ys. Even a "record" September for auto sales saw just 291 units moved.

Categorised as a luxury EV, Tesla is hardly setting the Indian market ablaze.

Predictably, competitors are vastly outperforming it. In September 2026, Tata Motors sold 14,791 EVs; Mahindra moved 7,780; JSW MG Motor India sold 5,242; and the Vietnamese brand Vinfast, which only launched last year, sold 2,964 units. 

Even BMW outsold Tesla in the electric segment. 

Tellingly, Tesla’s global archrival, BYD, sold 836 cars that same month. Interestingly, while Tesla received the royal treatment, BYD, burdened by strained Sino-Indian relations, has faced heavy regulatory headwinds for six years.

BYD also has a manufacturing presence in India, though not for cars.

India’s Twin Policy Blunders

Looking back, Indian policymakers made two fundamental miscalculations.

First, they suffered from the illusion that Tesla would replicate the "Apple effect," ushering in an entirely new electronics-automotive ecosystem that would galvanise investment and employment. 

This ignored the reality that India’s automotive ecosystem was already highly developed, boasting massive investments from nearly every major global auto giant. 

Wooing Tesla essentially meant discounting the domestic industry’s own hard-won successes. 

Moreover, by the time New Delhi was beginning to make its EV policy moves, the global EV market was maturing rapidly, and Tesla’s preeminent brand positioning was already eroding in the face of technologically comparable, better-priced alternatives from companies like Hyundai and Kia, which possessed vast sales and service networks in India.

The second, and perhaps graver, mistake was the geopolitical gamble: believing that appeasing Musk was a backdoor strategy to win brownie points with Donald Trump, who secured the presidency in November 2024. 

In hindsight, it is glaringly obvious that attempts to mollycoddle the Trump administration, directly or indirectly, have failed. If anything, these maneuvers have backfired spectacularly.

Can India Move Faster On Trade Policy? 

Certainly.

The recent Free Trade Agreements with the UK and Europe demonstrate a capacity for agility, however delayed. 

But conducting trade policy by exception, attempting to contort national frameworks to satisfy the singular demands of even the world's most famous innovator, has proven to be a series of unforced errors.

This brings us back to Starlink. The rationale for widespread satellite broadband in India, where terrestrial mobile data is cheap and ubiquitous, is debatable in itself and The Core Report has argued this on several occasions last year. 

The real error was allowing Musk and his team to believe that changes to India’s regulatory architecture could simply be rammed through, or that broadcasting displeasure on social media could force sovereign capitulation. 

That impression was likely cemented during the initial, overly eager engagements in 2023. 

India is now paying the price for projecting weakness in the face of celebrity capital.

7 Stocks Built to Hold Forever. See the Full List.

Chasing the next hot stock can be exhausting, and it rarely builds wealth the way investors expect. The strongest long-term portfolios are often anchored by durable, blue-chip businesses designed to withstand recessions, inflation and shifting market leadership.

MarketBeat’s free 7 Stocks to Buy and Hold Forever report identifies companies across technology, retail, consumer staples, healthcare, networking, sporting goods and utilities. Each offers its own mix of stability, income, growth and staying power.

These are not speculative names built around the latest headline. They are established businesses selected for investors who would rather own quality companies for years than constantly chase the market.

Get your complimentary copy and see all seven names today.

Get the Free Report

$4.57 billion

That’s how much foreign portfolio investors have pulled out of Indian equities so far in October, according to data by the National Securities Depository Limited (NSDL). Total outflows in 2026 have now crossed US$31 billion.

Origin: Analysts told PTI that rising crude oil prices, a stronger US dollar and elevated US bond yields, which make American assets more attractive relative to emerging markets like India. The AI-led rally in markets such as South Korea and Taiwan is also drawing foreign capital away from Indian equities.

Data from recent months:

• September: Net outflows of Rs 35,861 crore (around US$3.7 billion).

• August: Net inflows of Rs 29,631 crore (around US$3.1 billion).

• July: Net inflows of Rs 20,200 crore (around US$2.1 billion).

After returning to Indian equities in July and August, foreign investors turned sellers again in September. October’s outflows have already surpassed those of the previous month.

Future: A sustained decline in crude oil prices and US bond yields could ease pressure on Indian markets and make equities more attractive to foreign investors. More competitive valuations and stronger corporate earnings could also encourage a return of foreign capital.

However, as long as US assets offer relatively attractive returns and global uncertainty persists, foreign investors could continue shifting money away from Indian equities.

CJP Vows Nationwide Protests

The Supreme Court has directed authorities to ease restrictions on movement across Delhi following a crackdown on Cockroach Janta Party (CJP) protesters at Jantar Mantar.

During a special hearing on Sunday, the court directed metro services to operate normally unless public-order concerns justified restrictions. It also asked authorities to review barricades, ensure uninterrupted internet access as permitted by law and prevent illegal detentions of peaceful protesters. The bench sought a compliance response by Tuesday. 

Context: The hearing followed Saturday’s demonstration demanding Chief Election Commissioner Gyanesh Kumar’s resignation over alleged irregularities in the Special Intensive Revision (SIR) of electoral rolls. Authorities closed 45 metro stations, restricted rail services and curtailed internet access in parts of the capital.

Future: At a press briefing on Sunday, CJP co-convener Ashutosh Ranka declared that the “fight has just begun”, while leader Saurav Das vowed to expand protests nationwide until Kumar resigns. The party also challenged claims that its leaders had agreed to stop protesting after their release from custody. 

The government and BJP have raised concerns about public order, while the court has emphasised the need to protect fundamental rights and allow peaceful demonstrations within the law.

IIT Bombay Cautions On UPI MDR

The proposed merchant discount rate (MDR) on UPI transactions should be rationalised before rollout, or public trust in the payments platform could erode, an IIT Bombay report has said. The study, “UPI at a Crossroads: Reintroducing the MDR”, said UPI’s long-term economic benefits outweigh the extra income merchant fees would generate.

Overview: The report suggested charging the fee only to merchants with annual turnover above Rs 50 crore, who must by law accept UPI. It said this would cover about 90% of the fee National Payments Corporation of India (NPCI) has proposed. It also said loan EMI payments and debt collection should be free of the fee.

Setup: The NPCI issued a circular on September 15 imposing a 0.4% MDR on person-to-merchant payments above Rs 2,000, capped at Rs 300. The report said the Reserve Bank should decide on MDR under the Payment and Settlement Systems Act, 2007.

The Core earlier reported how banks do the least in UPI payments, but they will now earn the most.

India's Festive Shopping Boom

India’s e-commerce platforms sold goods worth nearly Rs 24,000 crore in the first two days of festive sales, Redseer Strategy Consultants told PTI.

By the Numbers: Shoppers placed an estimated 8-9 crore orders, with mobile phones accounting for 38-40% of sales value. Around 6-6.5 crore shoppers participated, two-thirds of whom came from Tier 2 towns and rural areas.

What’s Next?: Meanwhile, brokerage Emkay expects India’s quick commerce sector to accelerate, with leading platforms potentially recording 21.6% quarter-on-quarter growth in net order value in the second quarter of FY27.

Higher minimum order values and reduced discounts at some platforms are shifting demand towards competitors. Emkay also expects food delivery platforms to maintain around 18% year-on-year growth despite intensifying competition during the festive season.

Can Robotics Make Regenerative Farming Scalable?

Greenfield Robotics is on a mission to give farmers alternatives to herbicide-dependent weed control. BOTONY is the beginning of a broader robotic farming system designed for a wider range of applications in the field.

The Reg A+ offering is now live for investors who want to be part of what comes next.

Invest in Robots Replacing Herbicides

^{This Reg A+ offering is made available through StartEngine Primary, LLC, member FINRA/SIPC. Please read the Offering Circular and related disclosures before investing. This investment is speculative, illiquid, and involves a high degree of risk, including the possible loss of your entire investment.}