India-US trade deal reduces car tariffs, leaves out electric vehicles

India and the United States are finalizing a trade agreement that will, for the first time in years, significantly reduce import duties on expensive American cars. However, electric vehicles have been left out of the deal. According to Reuters, tariffs on vehicles with engines over 3000 cc will be gradually lowered from the current 70-110% to 30% over a ten-year period. This applies exclusively to internal combustion engine models; EVs have been deliberately excluded from the concessions, once again blocking a preferential path into the country for Tesla.

This move highlights India's strategy of protecting its emerging EV market by maintaining high import barriers for electric cars, a contrast to its agreement with the European Union, which includes tariff reductions for certain electric models. The real concession in the U.S. deal is the zero-duty provision for American motorcycles, which will make brands like Harley-Davidson significantly more competitive.

As the world's third-largest automotive market, India has traditionally shielded its domestic industry with high tariffs, forcing most global brands to establish local assembly to avoid costly imports. The new deal will only ease conditions for a limited segment of luxury ICE vehicles and motorcycles. The agreement is expected to be formalized in March, with its ultimate impact depending on the details of the transition period and any potential quotas.