Under intense pressure from US President Donald Trump, India may finally ease some of its hefty tariffs on imported automobiles. These strict regulations are highly beneficial for local Indian brands but have driven many foreign automakers out of the world’s third-largest automobile market. The country might start with reductions in tariffs on large-capacity motorcycles, which would directly benefit brands like Harley-Davidson.
Currently, India imposes tariffs of up to 110% on imported cars and charges a 50% duty on those with engines up to 1,600 cc. While this rate was reduced to 40%, sources indicate that the Indian government is considering completely abolishing tariffs on motorcycles with an engine capacity of 750 cc or more. Such a move could be part of India’s efforts to conclude a new trade deal with the United States, especially after the US imposed 26% retaliatory tariffs on Indian goods.
A Potential Win for Harley-Davidson and Others
As noted, reducing tariffs on large-capacity motorcycles makes sense, as these models represent only a small fraction of the 16 million vehicles sold annually in India. However, perhaps even more significant than any reduction in motorcycle tariffs is the possibility that India may also abolish tariffs on imported auto parts, but only if the US agrees to do the same.
“Americans want to gain greater access to India’s markets,” US Vice President J.D. Vance said this week during a visit to India. “This is a great place for business, and we want to give our people greater access to this country and its residents.”
India has protected its market for decades, giving local players like Tata Motors and Mahindra & Mahindra strong support. This policy of protectionism has also forced international automakers like Suzuki and Hyundai to establish local manufacturing ventures.
However, growing pressure from the US and Europe is forcing India to reconsider its position. Both regions seek greater access to the Indian market, and with local brands at the forefront, there is a clear opportunity for foreign companies to expand their operations.
Consumers could also benefit from tariff reductions, especially if international brands are encouraged to return, creating greater competition and potentially lowering prices. Only 15,000 cars are imported into India annually, with just 1,000 of them coming from the US. The high tariffs have even stopped Tesla from entering the country’s market, among other foreign brands, although Musk has recently been negotiating with the government.
However, even if India lowers tariffs, Bloomberg notes that it is unlikely that US-assembled cars will be sold in large volumes, as they will remain too expensive for most buyers. Existing European brands already present in the market, such as VW and Skoda, might benefit more from tariff reductions, as they have more experience in producing affordable models in the country.