Elon Musk says Tesla is still working through 'a lot of challenges' with the Indian government as it looks to launch in the country

• Elon Musk said Tesla is working through "a lot of challenges" with the Indian government.
• India is the world's fifth-largest auto market and represents a huge opportunity for Tesla.

Elon Musk said Tesla is "still working through a lot of challenges" with the Indian government before launching an operation there.

The Tesla CEO was responding to a tweet asking when the company would launch in the country.

Tesla is lobbying the Indian government to slash import taxes on EVs before it agrees to start selling in the market.

India's import taxes on electric vehicles are 60% on EVs that cost $40,000 or less and 100% on those above $40,000.

In a tweet last July, Musk said that India's import duties are "the highest in the world by far of any large country!"

The Indian government has rejected Musk's claims on Twitter, BusinessToday reported. Sources told the Indian news outlet that Musk is trying to pressure the government via social media and that the electric vehicle maker wants lower import taxes without committing to production in the country.

The Indian EV market is still in its infancy, but the government is aiming for at least 65% of all new vehicle sales to be electric by 2030.

As the world's second-most populous nation, India's auto market — now the world's fifth-largest — is expected to grow on the back of a burgeoning tech-savvy middle class, presenting potentially colossal growth opportunities for carmakers.

Last January, Tesla registered Tesla Motors India and Energy Private Limited in Bengaluru. It had planned to start by importing and selling the Model 3 sedan, Reuters reported, citing sources familiar with the matter.

But the government wants Tesla to produce its cars in India instead — and the country's transport minister told Reuters it was prepared to offer Tesla incentives to do so.

Musk later said on Twitter that Tesla was "quite likely" to build an EV factory in India — but only if it could import completed vehicles at lower tax rates.

The Indian government has already approved seven Tesla EV variants, Business Insider India reported last month.

It's not just Tesla — Musk's SpaceX has also been facing problems in India. In November, Indian lawmakers said the company's Starlink internet service did not have a license to operate in the country. The company was then ordered to refund customer deposits for pre-orders, the Economic Times reported.