US Seeking Zero Tariffs on Car Imports

The United States is demanding that India eliminate car import tariffs as part of a proposed free trade agreement that it hopes will help American automakers like Tesla Inc. expand their presence in the market. However, all of them are not ready to abolish these duties to zero right away, although they discuss the possibility of gradual reduction, sources said. The tariffs on automobiles in India are some of the highest in the world, which are between 110 per cent. These duties have drawn criticism from Elon Musk, the CEO of Tesla, who has in the past blamed high duties for the company’s delay in entering the Indian market. Now that the company has set its sights on the Indian market once again, the US government is eagerly supporting Tesla's efforts to lower import duties. President Donald Trump has been very vocal regarding India’s trade policies and has recently pointed out auto tariffs in his congressional address. He said that if India does not ease the restrictions, the US may be forced to impose reciprocal measures. The American request for the reduction of tariffs is part of a larger initiative to increase trade between the two countries and the talks are aimed at establishing a $500 billion in total trade by 2030. Nevertheless, India is slow to act, although it is monitoring the situation. The government has consulted with indigenous automakers, such as Tata Motors and Mahindra & Mahindra, who have raised concerns over the impact of the tariff cuts. These firms say that allowing import duties to drop could damage domestic production, especially in the growing electric vehicle industry. Indian Commerce and Industry Minister Piyush Goyal is in the US to discuss trade, and he has met Commerce Secretary Howard Lutnick and other government representatives. While India has recently liberalised tariffs on items like luxury motorcycles and other goods, auto tariffs are still a concern. In the meantime, India may choose to gradually decrease tariffs on autos in order to meet international trade objectives without jeopardising the domestic automotive sector.

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