India is weighing a significant reduction in import tariffs on electric vehicles (EVs) built in the United States, as part of ongoing trade talks aimed at easing tensions with Washington, government sources told Reuters.
The move would mark a departure from decades of high import duties that have shielded the domestic auto sector. Currently, India imposes tariffs of up to 110% on imported EVs, making it one of the most protected auto markets globally.
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“We have protected the auto industry for far too long. We will have to open it up,” a government source familiar with the matter said, without specifying the level of tariff reduction being considered.
The tariff cuts, if implemented, could directly benefit U.S. automaker Tesla, which has long sought entry into India but retreated over the years due to steep import duties. Local media reports indicate Tesla is preparing to launch in India, with initial deliveries possibly beginning as early as next quarter, pending final policy announcements.
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Tesla’s renewed push comes as India navigates trade friction with the U.S., its largest export market. On Wednesday, Washington imposed a 26% tariff on Indian goods—less than the 34% levy on Chinese imports, but still significant.
Domestic automakers, previously successful in lobbying against tariff reductions, have recommended phased cuts beginning only after 2028, gradually declining to 30%. However, the government appears more inclined to accelerate liberalisation in response to mounting trade pressure.
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The implications could extend beyond the U.S. New Delhi is concurrently negotiating free trade agreements with the European Union and the United Kingdom. A preferential tariff policy for U.S.-built EVs may trigger calls from Brussels and London for similar treatment—demands that the EU has reportedly pursued for over a decade.
While legacy U.S. automakers such as Ford and Chevrolet exited India due to weak demand and regulatory hurdles, Ford retains a manufacturing footprint and may revisit the market if import conditions improve.