India is set to sharply lower import duties on premium American automobiles under the interim trade arrangement with the United States, even as it firmly excludes electric vehicles from the scope of concessions. According to an Indian government official cited in a Reuters report, tariffs on high-end US cars will be reduced to 30 per cent from levels that currently go as high as 110 per cent, while duties on Harley-Davidson motorcycles will be eliminated.
The announcement comes as New Delhi and Washington move closer to finalising an interim trade framework, released on Friday. The development follows remarks by US President Donald Trump earlier this week, in which he said tariffs on Indian exports to the US would be cut to 18 per cent from 50 per cent, provided India stopped purchasing Russian oil.
Gradual Relief For High-End Combustion Vehicles
Under the proposed framework, India will phase down tariffs on traditional internal-combustion engine vehicles with engine capacities above 3,000 cc. An official familiar with the discussions said in the report that these duties would be reduced gradually to 30 per cent over a 10-year period. The move is expected to benefit a narrow segment of luxury carmakers while preserving protections for India’s mass-market auto industry.
India, which ranks as the world’s third-largest car market after the US and China, has historically imposed steep import duties, ranging between 70 per cent and 110 per cent, to shield domestic manufacturers. As a result, imports of American cars remain limited, though high-end motorcycles such as Harley-Davidsons already have a presence in the market.
Tesla Left Out As EVs Excluded
Notably, electric vehicles have been kept outside the interim deal. As per the report, the official said this effectively blocks a lower-tariff entry route for Tesla, a long-standing demand of Elon Musk, who has repeatedly criticised India’s high import duties. By excluding EVs, India has signalled that it is not yet ready to open up this strategically sensitive segment to US automakers.
This position marks a contrast with India’s negotiations with the European Union. In talks with the EU, New Delhi has agreed to deeper tariff cuts, potentially as low as 10 per cent, across a broader range of vehicles, including eventual concessions for certain electric models.
What Happens Next In The Trade Talks
Beyond cars, other premium motorcycles imported from the US are also expected to see reduced duties under the interim arrangement. However, the finer details of the pact are still being finalised. The official said in the report that the full contours of the agreement have not yet been made public.
According to officials, the agreed tariff reductions are likely to come into effect only after both sides formally sign the agreement, which is expected to happen in March, states the report.
