U.S. Pushes India to Cut Auto Tariffs as Trade Deal Talks Progress

The United States is pressuring India to eliminate high import tariffs on cars as part of an upcoming trade deal, but India remains hesitant to slash duties to zero immediately. The negotiations, which could open doors for Tesla’s long-awaited entry into India, are expected to feature auto tariffs as a key issue.

India currently imposes import taxes as high as 110%, which Tesla CEO Elon Musk has repeatedly criticized. U.S. President Donald Trump has also voiced strong opposition to these tariffs, threatening reciprocal measures against India. Washington has made it clear that tariff reductions across multiple sectors, particularly in automobiles, are a top priority.

Following a recent meeting between Trump and Indian Prime Minister Narendra Modi, both nations agreed to resolve trade disputes and aim for $500 billion in bilateral trade by 2030. Indian Trade Minister Piyush Goyal is currently in the U.S. for discussions with Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer.

Although India is unlikely to eliminate auto tariffs immediately, it has been encouraging local automakers to prepare for a lower-tariff regime. Last month, the government engaged with domestic car manufacturers to assess potential tariff reductions. Industry leaders like Tata Motors and Mahindra & Mahindra have opposed these cuts, arguing that lower import taxes could hurt local manufacturing and investment in India’s emerging EV sector.

In a move to signal trade openness, India recently reduced import duties on 30 products, including high-end motorcycles, and plans to review luxury car surcharges. However, it remains cautious about fully removing tariffs on auto imports, balancing trade negotiations with protecting its domestic industry.