India is set to lower import tariffs on electric vehicles (EVs) as part of a trade deal with the United States, despite opposition from domestic automakers, Reuters reported, citing government and industry sources.
According to the report, the Indian government has decided to move forward with EV tariff reductions, rejecting requests from local automakers such as Tata Motors and Mahindra & Mahindra to delay cuts until 2029. The sources indicated that automakers have been lobbying to phase in tariff reductions gradually, bringing duties down to 30% from the current rates, which can reach approximately 100%.
The decision is reportedly part of India's broader efforts to strengthen trade ties with the U.S. and address concerns raised by former U.S. President Donald Trump and Tesla CEO Elon Musk regarding India's high import duties. Reuters cited a government official as saying, "We have protected the auto industry for far too long. We will have to open it up."
The exact size of the tariff reductions has not been disclosed due to ongoing negotiations with Washington, the report noted. However, the move is expected to benefit Tesla, which has been preparing to enter the Indian market with showrooms in Mumbai and New Delhi.
Meanwhile, domestic automakers fear that an immediate reduction in EV tariffs would negatively impact their investments in local manufacturing, Reuters reported. Indian automakers, who have committed significant capital to EV production, argue that allowing cheaper imports before 2029 could hinder their competitiveness. Furthermore, there are concerns that the U.S. trade deal could set a precedent for similar negotiations with the European Union and the United Kingdom, further intensifying competition in India's developing EV sector.
India's EV market, which accounted for only 2.5% of total car sales in 2024, is expected to expand significantly, with a government target of reaching 30% EV penetration by 2030. Domestic automakers are open to phased duty reductions on gasoline-powered vehicles but are urging caution on EV tariff cuts due to their reliance on government incentives for local manufacturing, the report added.
Reuters also noted that India's commerce ministry and the Society of Indian Automobile Manufacturers (SIAM) had not responded to requests for comment at the time of publication.