India Plans To Lower EV Tariffs To Secure Trade Deal With US: Report

The government is planning to reduce import tariffs on electric vehicles (EVs) as part of ongoing negotiations for a trade deal with the US, Reuters reported on Wednesday, citing government and industry sources.  The decision comes amid domestic automakers lobbying the government to delay any cuts to EV duties until 2029.

These companies are seeking a phased reduction to 30%, down from the current rate of nearly 100%, two industry sources and one government official told Reuters. New Delhi is moving forward with its plan to cut tariffs on EVs, which have been a contentious issue with Trump, who has criticized India’s high import duties while labelling the country as a “tariff king.”

“We have protected the auto industry for far too long. We will have to open it up,” one government official told Reuters, underlining that the country is determined to significantly reduce tariffs, including on electric vehicles.

The move to lower EV tariffs would benefit global automakers like Tesla, which has been preparing to enter the Indian market with showrooms in Mumbai and New Delhi, and has faced significant challenges due to the high import duties., the report said. Trump too, on an earlier occasion, has called it “impossible” for Tesla to sell cars in India under current conditions.

However, the decision to reduce EV tariffs will likely be a setback for Indian carmakers, which have heavily invested in local EV manufacturing. These companies had reportedly lobbied against tariff cuts, arguing that they would hurt their competitiveness in the domestic market. According to the report, many of these automakers fear that an agreement with the US could set a precedent for future trade talks with the European Union and the United Kingdom, potentially intensifying competition in the country’s fast-growing but relatively small EV sector.

As of 2024, EV sales in India accounted for only 2.5% of the total car sales of 4.3 million units, the report said, adding that the government has ambitious plans to increase this share to 30% by 2030.

Automakers are open to some immediate duty cuts on gasoline models, followed by a phased reduction to 30%, but have sought careful consideration for EV duties given early investment commitments, a government source told Reuters.

Meanwhile, President Trump is expected to announce a new round of reciprocal tariffs on trading partners later today.

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