Amid Trump tariff threats: India cuts import duty on US bikes, cars in boost to Harley, Tesla

India Cuts Import Duties on Luxury Vehicles, EV Batteries, and Smartphones Amid US Trade Tensions

NEW DELHI: India’s Union Budget 2025-26 has significantly reduced customs duties on high-end motorcycles, luxury cars, and smartphone components—a move that appears to benefit American companies like Harley-Davidson, Tesla, and Apple. This decision comes after US President Donald Trump criticized New Delhi as a “tremendous tariff maker.”

However, Finance Minister Nirmala Sitharaman clarified that the duty reductions were not a response to Trump’s tariff policies but rather part of India's strategy to strengthen its economy and manufacturing sector. “We are looking at our own economy… to make it a manufacturing hub,” she emphasized.

Key Import Duty Reductions:

• High-End Motorcycles: Import duty on completely built-up (CBU) motorcycles up to 1,600cc is reduced from 50% to 40%.
• Semi-Knocked Down (SKD) Kits: Duty cut from 25% to 20%.
• Completely Knocked Down (CKD) Units: Reduced from 15% to 10%.
• Luxury Cars: Tariff on vehicles above $40,000, including station wagons and race cars, slashed from 125% to 70%.
• EV Batteries: Basic customs duties on lithium-ion batteries used in electric vehicles are scrapped entirely.
• Smartphone Components: Customs duty exemptions on 28 items related to mobile phone battery production, benefiting global manufacturers like Apple.

Impact on US Companies & Trade Relations

The tariff cuts particularly favor Harley-Davidson, which has faced long-standing trade disputes over high Indian import duties. The company originally entered India in 2010 under the “mangoes for motorcycles” deal but exited in 2020. It later re-entered the Indian market through a partnership with Hero MotoCorp, which now manufactures and sells the Harley-Davidson 440X.

For Tesla, the removal of EV battery tariffs could pave the way for its entry into India’s growing electric vehicle market. CEO Elon Musk had planned a visit to India in April 2024 but postponed it due to “Tesla obligations.”

Meanwhile, Apple, which holds a 23% share in India’s smartphone market, stands to benefit from lower import costs, reinforcing India's position as the world’s second-largest mobile phone manufacturer.

Geopolitical & Economic Implications

The tariff cuts are seen as a strategic move to ease trade tensions with the US and capitalize on the US-China trade war by expanding India’s role in global supply chains. Amid concerns over Trump’s “America First” trade policies, which include threats of 100% tariffs on BRICS nations, India’s latest import tax reductions may serve as a diplomatic gesture to prevent further trade barriers on Indian exports.

According to a Reuters report, India’s decision to cut import duties reflects its broader strategy to navigate an unpredictable global trade landscape shaped by rising US tariffs and shifting economic alliances.