NEW DELHI (Diya TV) — India is set to lower import tariffs on electric vehicles (EVs) to help seal a trade deal with America, in the face of resistance from local automakers who are requesting a phase-down by 2029. India’s government is set to lower EV tariffs substantially under the first phase of tariff cuts in talks for the bilateral trade deal.
This will be in line with efforts to ease trade tensions with U.S. President Donald Trump, who has complained about Indian tariffs. A sharp reduction in tariffs would benefit Tesla, which is poised to start selling imported cars in India, but disadvantage local EV manufacturers like Tata Motors and Mahindra & Mahindra.
These companies, having invested huge sums in local EV production, argue that an early reduction in tariffs would damage their competitiveness. India, where EVs have so far contributed only 2.5% of automobile sales in 2024, wants to raise this to 30% by 2030 as competition rises from foreign markets.
The action comes on the heels of President Trump set to announce new retaliatory tariffs on trading partners, so-called “Liberation Day” tariffs, that will have a significant effect in numerous industries, including autos and electric vehicles. American businesses are bracing for the tariffs, which will create significant issues across industries.
The Indian government believes that the auto industry must be opened up and that it has been insulated for too long. The authorities say that the decline in tariffs, including on electric vehicles, would be significant. While the move is to increase U.S.-India trade, it has caused alarm bells among local auto players regarding how it will impact the domestic EV business and the competitiveness of local players.
