India-US trade deal to scrap import tariffs on Harleys; Tesla and EVs left out

India is set to lower import tariffs on premium American cars and scrap duties completely on Harley-Davidson motorcycles as part of its interim trade agreement with the United States, but will leave electric vehicles out of the picture. According to a Reuters report, duties on high-end cars will be reduced to 30 per cent from as high as 110 per cent, but the deal leaves no concessions for EVs.

Announced on Friday, February 6, the interim framework marks a move toward a broader trade pact between the two countries. The development comes shortly after US President Donald Trump indicated that tariffs on Indian exports to the US would be lowered to 18 per cent from 50 per cent, contingent on India stopping its purchases of Russian oil.

As part of the proposed framework, import duties on internal combustion engine cars boasting capacities above 3,000 cc will be lowered gradually to 30 per cent over a ten-year-period. While the agreement opens the door wider for American luxury vehicles and premium motorcycles, it blocks any chance of tariff relief for OEMs such as Tesla. The Elon Musk-led company has repeatedly flagged India’s high import taxes as a barrier to entry. It currently sells the Tesla Model Y as its sole offering on our shores, priced from ₹59.89 lakh (ex-showroom).

India’s position with the US differs starkly from its approach with the European Union: the India-EU FTA aims for much deeper tariff cuts, as low as 10 per cent, across a broader set of vehicles, including eventual concessions for some EVs.

The world’s third-largest car market has historically followed a protectionist strategy for its domestic auto industry through high import duties ranging from 70 per cent to 110 per cent. Imports from the US remain limited, largely restricted to niche premium brands such as Harley-Davidson and Indian Motorcycles. Under the interim pact, other high-end motorcycles from the US are also expected to benefit from lower duties.

The terms of the interim agreement are yet to be fully made public, with the trade ministry not having issued a formal statement so far. The tariff changes are expected to come into effect once the two sides formally sign the agreement, which is currently anticipated in March.

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