- The tax on imported Indian cars is as high as 110%, and Tesla Chief Elon Musk criticized it as the steepest man in the world.
Sources told Reuters that the U.S. hopes India will remove tariffs on automobile imports under a trade agreement proposed between the two countries, but New Delhi is reluctant to immediately lower such responsibilities to zero, even if it considers further cuts.
One of three sources said India’s high automatic tariffs will take place during formal talks on a bilateral trade deal that has not yet begun, all three sources briefly paving the way for U.S. electric car maker Tesla, which is launching for India.
The tax on imported Indian cars is as high as 110%, and Tesla Chief Elon Musk criticized it as the steepest man in the world. Last year, the EV giant shelved its plans to enter the world’s third largest auto market for the second time.
Musk has now found support from U.S. President Donald Trump, who has repeatedly opposed India’s high taxes, and in his speech to Congress on Tuesday, slammed the country’s automatic tariffs for more than 100%, threatening mutual action.
“The U.S. is asking India to lower tariffs to zero or negligible in most areas,” the first source said, and the expectation for New Delhi to eliminate automatic tariffs was “clearer than anyone else”.
The second source said India is “listening to the United States” but has not backed down and responded to its position on tariffs after consulting the local industry.
The U.S. Trade Representative, the Office of India’s Trade Department and Foreign Ministry did not respond to a request for comment.
Trade valued at $500 billion
After Trump met with Indian Prime Minister Narendra Modi last month, the two countries agreed to settle the tariffs in the fall of 2025 and work in the first part of the deal, aiming to bilateral trade through 2030 to 2030.
Indian Trade Minister Piyush Goyal, who is on a nearly week-long trip to the United States, met with U.S. Commerce Secretary Howard Lutnick for trade talks on Tuesday. He is also expected to meet with U.S. Trade Representative Jamieson Greer.
The first source and fourth person said that while India is unlikely to be reluctant to reduce tariffs on automatic imports to zero immediately, it has been preparing for a lower tariff regime and being open to competition.
Last month, the Indian government met with domestic automakers to decide to cut tariffs and learn about their reservations to immediate taxes.
India’s 4 million cars are one of the world’s most protected auto markets each year, with domestic players previously opposed to lowering tariffs, saying such a move would weaken investment in local manufacturing by making imports cheaper.
People like Tata Motors and Mahindra & Mahindra have lobbyed in particular against lowering import tariffs on electric vehicles, saying it would harm the nascent sector they invest heavily in.
Vowed to avoid trade protectionism signals, India cut import tariffs on nearly 30 items, including high-end motorcycles, last month and said it would review surcharges for luxury cars.
Learn about India’s upcoming cars, electric cars, upcoming Indian bikes and cutting-edge technologies that change the car landscape.
First Release Date: March 6, 2025, 09:45 IS
