As Tesla eyes entry into India, the US is reportedly pushing for the removal of high car import tariffs under a proposed trade deal. As per reports, while India is open to reductions, it is unwilling to lower tariffs to zero. In the past, Tesla chief Elon Musk has criticized India for levying the steepest tariffs in the world.
As Elon Musk-led Tesla’s entry into India’s auto market nears; the United States reportedly wants New Delhi to eliminate tariffs on car imports under a proposed trade deal between the two nations. As per the reports, India is ready to reduce the tariffs but not quite ready to bring it down to zero. Sources say that high tariff issue on car imports will feature in formal talks for a bilateral trade deal between the two nations that are yet to begin. It is noteworthy here that India charges as high as 110% taxes on cars being imported from the US.
India levies the Steepest tariffs?
In the past, Tesla Chief Elon Musk has criticized India for levying the steepest tariffs in the world. Notably, the EV giant last year shelved its plans to enter the world’s third-largest car market for a second time. Elon Musk has now gained backing from US President Donald Trump, who has frequently criticized India’s high tariffs. During his address to Congress on Tuesday, Trump condemned India’s auto tariffs of over 100%, warning of potential reciprocal action.
The new tariffs are causing concern among Indian exporters in sectors such as automobiles, chemicals, and jewelery. A report by Citi Research estimates that India could lose around $7 billion annually due to these tariffs.” The US ask is for India to bring tariffs down to zero or negligible in most sectors, except agriculture,” emphasizing that expectations regarding India’s auto tariffs were “clearer than any other.”
Another source says that India was “listening to the US” without resistance and would formulate a response after consulting domestic industries. However, the United States Trade Representative, along with India’s trade and foreign affairs ministries, have not commented on the matter.
Following a meeting between Trump and Prime Minister Narendra Modi last month, both nations agreed to address tariff disputes and target a phased trade deal by fall 2025, with an ambitious goal of achieving $500 billion in bilateral trade by 2030.
Union Minister Piyush Goyal is currently in the US on a nearly week-long visit, where he met US Commerce Secretary Howard Lutnick to advance trade discussions. He is also expected to hold talks with US Trade Representative Jamieson Greer.
While India is unlikely to immediately slash auto import tariffs to zero, sources suggest the government is preparing the domestic industry for a more competitive environment under a potential lower-tariff framework.
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