Domestic automakers such as Tata Motors and Mahindra & Mahindra have opposed lowering import tariffs, arguing that it would discourage investment in local manufacturing and undermine the nascent electric vehicle sector.
05 Mar 2025 | 2886 Views | By Autocar Pro News Desk
The United States is pressing India to eliminate tariffs on car imports as part of a proposed trade deal, but India remains cautious about an immediate reduction to zero, according to a Reuters report. India’s high auto tariffs, which can reach up to 110%, are expected to be a key ...
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The United States is pressing India to eliminate tariffs on car imports as part of a proposed trade deal, but India remains cautious about an immediate reduction to zero, according to a Reuters report. India’s high auto tariffs, which can reach up to 110%, are expected to be a key issue in the forthcoming trade negotiations.
This move is particularly significant for Tesla, which is preparing to enter the Indian market. Tesla CEO Elon Musk has previously criticized India’s high tariffs, which led the company to delay its expansion plans. Now, U.S. President Donald Trump has joined the criticism, calling India’s auto tariffs "among the highest in the world" and warning of reciprocal action, Reuters reported.
One source told Reuters that the U.S. expects India to lower tariffs to "zero or negligible" in most sectors, with agriculture being a possible exception. A second source noted that India is "listening to the U.S." and has not dismissed the request outright but will first consult domestic industries before responding.
Following a meeting between Trump and Indian Prime Minister Narendra Modi last month, both countries agreed to resolve trade disputes and work on a phased trade deal by fall 2025, with the goal of reaching $500 billion in bilateral trade by 2030. India’s Trade Minister Piyush Goyal is currently in the U.S., where he has met with U.S. Commerce Secretary Howard Lutnick and is expected to meet United States Trade Representative Jamieson Greer, as per the report.
While India is unlikely to immediately meet U.S. demands for zero auto tariffs, sources told Reuters that the government has been preparing the domestic auto industry for a future with lower import duties. Last month, Indian officials met with local automakers to assess their concerns about tariff reductions.
India’s automobile market, producing about 4 million vehicles per year, is one of the most protected in the world. Domestic automakers such as Tata Motors and Mahindra & Mahindra have opposed lowering import tariffs, arguing that it would discourage investment in local manufacturing and undermine the nascent electric vehicle sector, Reuters noted.
In a broader move to signal openness to trade, India recently reduced import tariffs on nearly 30 items, including high-end motorcycles, and announced plans to review surcharges on luxury cars.