Elon Musk’s Tesla cars in India: Donald Trump-led US government is seeking India’s agreement to remove tariffs on automobile imports as part of a proposed bilateral trade agreement. However, India is hesitant to immediately reduce such duties to zero, whilst considering potential reductions, according to sources who spoke to Reuters.
India currently imposes import duties of up to 110% on vehicles, which Tesla’s CEO Elon Musk has publicly criticised as amongst the highest globally. This led the electric vehicle manufacturer to previously abandon its plans to enter India’s market, which ranks as the world’s third-largest for automobiles.
The matter of India’s substantial automotive tariffs will be addressed in upcoming formal trade negotiations, as confirmed by one of three briefed sources to Reuters. This development could particularly benefit Elon Musk-led electric vehicle manufacturer Tesla, which is preparing to enter the Indian market.
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US President Donald Trump has backed Musk’s position, repeatedly criticising India’s high taxation. In his recent Congressional address on Tuesday, he specifically challenged India’s automotive tariffs exceeding 100%, suggesting possible retaliatory measures.
“The U.S. ask is for India to bring tariffs down to zero or negligible in most sectors, except agriculture,” stated the first source, noting that the expectation regarding automotive tariffs was “clearer than any other”.
A second source indicated India’s receptiveness to US proposals without direct opposition, mentioning that India would formulate its position on tariffs after consulting domestic industry stakeholders.
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Following US President Trump and Indian Prime Minister Narendra Modi‘s recent meeting, both nations agreed to address tariff disputes and develop the initial phase of an agreement by fall 2025, targeting bilateral trade of $500 billion by 2030.
Trade Minister Piyush Goyal is currently on an extended US visit, having met with US Commerce Secretary Howard Lutnick on Tuesday for trade discussions. He is scheduled to meet United States Trade Representative Jamieson Greer.
India recently demonstrated openness to trade by reducing import duties on approximately 30 items, including premium motorcycles, and announced plans to review surcharges on luxury vehicles, showing commitment to avoid protectionist measures.