India and the United States have moved closer to a trade arrangement that will significantly alter tariff treatment for high-end American vehicles, according to an official briefed on the negotiations. Under the interim framework released recently, India will cut duties on premium U.S. cars and eliminate import taxes on Harley-Davidson motorcycles, while excluding electric vehicles from the concessions.
The official said tariffs on conventional internal-combustion cars with engine capacity above 3,000 cc would be reduced from current levels - which reach as high as 110% on some models - and phased down to 30% over a 10-year period. The change is framed as gradual, with rates declining toward the 30% level across the decade.
Electric vehicles omitted
The interim framework specifically omits electric vehicles from the tariff reductions, the official added. That exclusion leaves U.S. electric vehicle manufacturers, including Tesla, without a lower-tariff pathway under this arrangement. The official characterized the exclusion as a deliberate stance in the interim pact.
The treatment of EVs under the interim pact contrasts with the access India has offered to the European Union, where tariff reductions have been described as steeper - to as low as 10% - and covering a broader set of vehicles that includes eventual concessions on some electric models.
Motorcycles and current trade patterns
India, which has long maintained high import duties to protect its domestic auto industry, currently applies steep tariffs that typically range from 70% to 110% on imported cars. The country imports relatively few cars from the United States but does bring in premium motorcycles such as Harley-Davidson models. Under the interim framework, duties on Harley-Davidson bikes will be removed, and other premium motorbikes will see reduced duties, the official said.
The official who provided the details requested anonymity because the full terms of the interim pact have not been publicly disclosed. India’s trade ministry did not immediately respond to an emailed request for comment outside of normal office hours. The tariff changes are expected to be implemented after the two sides sign a formal agreement, which is anticipated to take place in March.
Details remain constrained to the interim framework made public by the negotiating parties. Observers and market participants seeking certainty on the timing and mechanics of implementation will need to await the formal signing and any subsequent disclosures of the full terms.