By Aditi Shah, Shivangi Acharya, and Aftab Ahmed
NEW DELHI (solusikaki.com) – The Indian government intends to reduce import duties on electric vehicles, dismissing pleas from domestic car manufacturers who sought a postponement of these reductions for four years. This decision aligns with New Delhi’s priority of finalizing a trade agreement with the United States, according to information provided by government and industry insiders to solusikaki.com.
The automobile manufacturers are urging Prime Minister Narendra Modi’s administration to postpone reducing electric vehicle duties until 2029, and instead gradually lower them to 30% from their current level of around 100%. This information comes from two industry insiders and an official source within the government.
Nevertheless, New Delhi is committed to decreasing electric vehicle duties — which have irritated U.S. President Donald Trump and his supporter, Tesla CEO Elon Musk — and this area is slated to be included in the initial batch of tariff cuts as part of an anticipated bilateral trade agreement, according to two officials from this government.
"The automotive sector has been shielded for an extended period; we must now expose it to new opportunities," stated the second governmental representative, noting that their strategy involved substantially reducing duties, encompassing electric vehicles as well.
The authorities chose not to reveal the extent of the proposed tariff reduction due to continuing talks with Washington.
The informants, acquainted with the discussions and the automotive sector's requirements, chose to remain anonymous as they lack authorization to communicate with the press.
The Commerce Ministry of India and the Society of Indian Automobile Manufacturers, representing automakers in the globe's third-biggest automobile market, didn't promptly reply to emailed requests for comments.
Delhi’s strategy to reduce taxes on electric vehicles and other products aims at strengthening ties with Trump—who has labeled India as the “king of tariffs”—while simultaneously preparing to declare retaliatory tariffs on trade allies later today.
A prompt reduction would signify a win for Tesla, as they have completed showrooms in Mumbai and New Delhi with plans to start selling imported vehicles in the South Asian country this year. Trump has stated that it remains “unfeasible” for Tesla to make sales in India at present and would be unjust if the company was required to establish a manufacturing plant there.
However, this situation could pose a challenge for homegrown companies such as Tata Motors and Mahindra & Mahindra, which have poured millions of dollars into indigenous electric vehicle production and plan further investments. These firms had also campaigned against reducing import duties.
The automobile industry is concerned that reaching an accord with the U.S. might establish a precedent for continuous trade discussions with the European Union and Britain, according to three sources. This could heighten competitive pressures within India’s nascent yet rapidly expanding electric vehicle market.
In India, Tata Motors leads the electric vehicle market, which made up only 2.5% of overall car sales totaling 4.3 million units in 2024. The government aims to boost this percentage to 30% by 2030.
Automobile manufacturers support an initial decrease in duties on conventional gas-powered vehicles, followed by a gradual reduction down to 30%. However, they state that their investments in electric vehicle production depend on incentives from New Delhi aimed at encouraging local manufacturing under a program set to run through 2029. They warn that permitting lower tariffs on imported cars prior to this could undermine their competitive position, according to the sources mentioned.
"Their stance on ICE (internal combustion engine) cars isn’t as strict, but they've called for thorough deliberation regarding duties on electric vehicles due to initial investment pledges," explained the first governmental informant.
(Reported by Aditi Shah, Shivangi Acharya, and Aftab Ahmed. Extra reporting provided by Aditya Kalra from New Delhi. Edited by Mark Potter.)