As Elon Musk-run Tesla draws nearer to penetrating the Indian auto industry, the United States is pressing New Delhi to remove auto import tariffs as part of a potential trade pact. Reuters reports that India is willing to lower the tariffs, but not to zero.
Sources close to the issue indicated that the high car import tariffs will be a central topic in official trade talks between the two countries. India currently charges up to 110% tariffs on imported US vehicles. Previously, Tesla CEO Elon Musk has condemned India for having the world’s steepest automobile import duties. The EV giant had previously put its Indian market entry plans on hold because of the high tariffs.
Trump Supports Musk, Attacks India’s Tariffs
US President Donald Trump has supported Elon Musk’s call for reduced tariffs, with whom he has shared a long-standing disagreement over India’s excessive trade barriers. Speaking to Congress on Tuesday, Trump criticized India’s auto tariffs that are over 100%, threatening to retaliate.
“The US asks for India to bring tariffs down to zero or negligible in most sectors, except agriculture,” a source said, adding that the expectations on India’s auto tariffs were “clearer than any other.”
Another source said India is “listening to the US” without opposition and will draft a response after consulting local industries. But officials from the United States Trade Representative, as well as India’s trade and foreign ministries, remained silent on the issue.
Targeting $500 Billion in Bilateral Trade
After a recent meeting between Trump and Indian Prime Minister Narendra Modi, the two countries agreed to resolve tariff conflicts and committed to working towards a phased trade agreement by fall 2025. The long-term target is to achieve $500 billion in bilateral trade by 2030.
Union Minister Piyush Goyal is at present in the US on a close to week-long trip to promote trade talks. On Tuesday, he held discussions with US Commerce Secretary Howard Lutnick and is additionally slated to discuss matters with US Trade Representative Jamieson Greer.
India is not likely to remove auto import tariffs overnight, but the government is setting domestic industries up for a more competitive landscape in a lower-tariff environment, sources suggest.
