India to slash EV import tariffs despite resistance from domestic carmakers, eyes deal with U.S.

India is moving forward with plans to lower import tariffs on electric vehicles (EVs), despite pressure from local automakers to delay such cuts until 2029.

The decision is part of a broader push to finalise a trade agreement with the United States, as Prime Minister Narendra Modi’s government seeks to improve ties with U.S. President Donald Trump’s administration.

According to government and industry sources quoted by Reuters, domestic carmakers such as Tata Motors and Mahindra & Mahindra had urged the government to hold off on reducing EV import duties, which currently range up to 100%, until their local manufacturing investments mature under existing incentive programs. They proposed a phased reduction to 30% after four years.

However, officials involved in the negotiations confirmed that EVs will be included in the first phase of tariff reductions under the proposed U.S.-India trade pact. “We have protected the auto industry for far too long. We will have to open it up,” one official stated, noting that the government is committed to “significantly” cutting tariffs, though the exact percentage remains under discussion.

The move could be a major win for Tesla, which has been lobbying for lower duties to begin importing vehicles into India. Tesla has already identified showroom locations in Mumbai and New Delhi. US President Trump, a vocal supporter of Tesla CEO Elon Musk, has frequently criticised India’s high import duties, referring to the country as a "tariff king."

While Tesla and other foreign manufacturers stand to benefit, Indian EV manufacturers worry about increased competition. The domestic auto industry is concerned that early tariff reductions could undermine their competitiveness and influence upcoming trade negotiations with the European Union and the United Kingdom.

Currently, EVs make up just 2.5% of India’s annual car sales, which totaled 4.3 million in 2024. The government aims to boost that share to 30% by 2030. Industry insiders say that while automakers are open to modest and immediate tariff cuts on traditional gasoline-powered cars, they want more protection for the nascent EV market until their infrastructure and investments are more established.

India’s commerce ministry and the Society of Indian Automobile Manufacturers have yet to comment publicly on the matter.