Key Highlights:
✅ India currently imposes car import tariffs as high as 110%
✅ Trump warns of reciprocal action if tariffs remain high
✅ Tesla plans to enter India but faces tariff hurdles
✅ Indian automakers open to cuts but oppose zero tariffs

 

US Pushes for Tariff Elimination in Trade Talks

New Delhi, March 5 (Reuters) – The United States is urging India to eliminate tariffs on car imports as part of a proposed trade deal between the two nations, sources told Reuters. However, India is hesitant to immediately bring tariffs down to zero, despite considering further reductions.

The issue of high auto tariffs will be a key topic in formal trade discussions, paving the way for Tesla’s much-anticipated entry into the Indian market.

India currently taxes imported cars up to 110%, among the highest in the world, which Tesla CEO Elon Musk has criticized. The EV giant previously halted its India plans due to these steep duties.

Trump Backs Tesla, Warns of Retaliatory Tariffs

U.S. President Donald Trump has thrown his weight behind Tesla’s push to reduce import tariffs, criticizing India’s over 100% duties as unfair. In a recent Congress address, Trump threatened reciprocal action if India does not lower tariffs.

“The U.S. ask is for India to bring tariffs down to zero or negligible in most sectors, except agriculture,” a source told Reuters.

While India has not rejected the U.S. demand outright, it is consulting local automakers before responding.

Trade Deal Targets $500 Billion by 2030

After Trump and Indian PM Narendra Modi met last month, both countries agreed to resolve trade disputes and finalize the first phase of a trade deal by fall 2025. Their goal is to boost bilateral trade to $500 billion by 2030.

Currently, Indian Trade Minister Piyush Goyal is in the U.S. for talks, meeting officials including U.S. Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer.

India’s Domestic Car Industry Opposes Zero Tariff

While India is unlikely to agree to immediate zero tariffs, the government has begun preparing local automakers for a potential lower tariff regime.

Indian carmakers like Tata Motors and Mahindra & Mahindra strongly oppose removing import duties on EVs, arguing that it would hurt local manufacturing and reduce investment in India’s nascent electric vehicle industry.

Last month, the Indian government held discussions with domestic automakers to gauge their stance on tariff reductions.

What’s Next?

🔹 Formal India-US trade talks to begin soon
🔹 India likely to consider partial tariff cuts instead of zero duty
🔹 Tesla’s India entry depends on revised tariff policies
🔹 Trump’s stance may push India toward a compromise