Tesla India has made more strides lately compared to its previous attempts to enter the country. While Tesla India solidifies its entry plans, the United States is pushing for tariff-free car imports.
U.S. President Donald Trump and his administration want India to eliminate or significantly reduce car import tariffs as both nations negotiate a bilateral trade deal.
According to Reuter’s sources, India hesitates to completely eliminate its car import tariffs even though it is considering reductions.
“The U.S. ask is for India to bring tariffs down to zero or negligible in most sectors, except agriculture,” noted one source.
Tesla India’s Role in Trump’s talks with India
India’s car import tariffs will be part of formal discussions with the Trump administration as the pair attempt to strike a bilateral trade deal. The trade deal between the U.S. and India will directly impact Tesla India.
Tesla India has been in the works for years, long before President Trump’s re-election. However, India’s tariffs on car imports have always been a sore spot, making Tesla hesitant to enter the market.
In 2023, Tesla allegedly proposed plans to invest billions in India, with talks of a new plant and even local battery production. Tesla’s investment plans seem to rely on India considering lower tariffs for imported vehicles.
Last year, the Indian government reportedly planned to finalize a new import tax policy to incentivize Tesla and other foreign electric automakers to invest in the country. As of this writing, India has not formally implemented a new import tax policy.
President Trump and Elon Musk have criticized India’s high levies for imported cars. If nothing changes, the U.S. President has voiced plans to reciprocate India’s high taxes.
India is carefully considering the Trump administration’s proposal regarding its car import tariffs. It has not entirely ruled out agreeing to the proposal but plans to consult with local industries before announcing its final decision.
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