The United States is pushing for India to reduce its high tariffs on imported cars as part of a proposed trade agreement, but India remains hesitant to immediately eliminate these duties, though it is open to gradual reductions, according to India Today.
The issue of India’s steep auto tariffs, which can reach as high as 110%, is expected to be a key topic in upcoming formal trade negotiations, though these talks have not yet begun. A reduction in these tariffs could benefit American automakers, including electric vehicle (EV) maker Tesla, which is planning to enter the Indian market. Tesla CEO Elon Musk has previously criticized India’s tariffs, calling them among the highest globally, and while Tesla delayed its India launch last year, the company has renewed efforts to begin operations there.
US President Donald Trump has voiced support for Musk’s position, using his address to Congress on Tuesday to denounce India’s high import taxes on cars and warning that reciprocal measures could be implemented if the tariffs are not reduced. One source familiar with the negotiations told Reuters that the US is asking India to lower tariffs to zero or near zero across most sectors, except for agriculture, with car tariffs being one of the most pressing issues.
Indian officials have not rejected the US request but are consulting with domestic industries before formulating a response. A second source indicated that India is open to dialogue on the matter.
In a meeting last month, President Trump and Indian Prime Minister Narendra Modi agreed to resolve tariff disputes and set a goal of reaching a trade deal by the fall of 2025, with the broader objective of boosting bilateral trade to $500 billion by 2030.
Union Trade Minister Piyush Goyal is currently on a week-long visit to the US, where he met with US Commerce Secretary Howard Lutnick to discuss trade issues and is also expected to meet with US Trade Representative Jamieson Greer.
Although it is unlikely that India will immediately remove tariffs on imported cars, the government has been preparing the local industry for potential tariff reductions and increased competition. Recently, Indian authorities held talks with domestic car manufacturers to address their concerns about lower tariffs. India’s car market, which produces approximately 4 million vehicles annually, is one of the most protected in the world. Local automakers, including Tata Motors and Mahindra & Mahindra, have expressed concerns that reducing import duties could make foreign EVs more affordable, potentially undermining their significant investments in India’s burgeoning EV sector.
