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Indian policymakers seem to be resigned to a potential rise in the cost of exporting to the US, in the wake of president Donald Trump’s tariff threats.
Indeed, in a pre-emptive strategy, New Delhi has substantially slashed Indian import duties on high-end/luxury motorcycles and cars, in its latest 2025-26 federal budget announcements, a move industry sources believe is meant to help manufacturers Harley-Davidson and Tesla in particular.
The cuts range between 5% and 10% on motorcycles imported as finished or semi-finished units, while the duty on cars priced above $40,000 has been reduced to 70%, from 125%.
Similarly, customs duties on lithium-ion batteries used for EV manufacturing have been abolished – an apparent sweetener for Elon Musk’s Tesla, which although mulling plans to enter the Indian market, has sent no firm investment signals since shelving its interest shown in 2022.
Harley-Davidson, meanwhile, ventured into India in 2010, but the going has been tough for its top-of-the-range bikes, due to their cost in a highly price-conscious market.
In his first term as president, Mr Trump had pushed back against India’s tariff barriers for Harley-Davidson products.
More recently, he trained his tariff guns on the 10-member BRICS group, which includes India, over threats to institute an alternative currency system to the US dollar.
Indian prime minister Narendra Modi is scheduled to visit the US next week to meet Mr Trump, and further tariff negotiations are anticipated.
Indian export industry stakeholders have welcomed the new customs changes, which they believe could reduce the country’s average import tariffs by 1%, but maintain that these modest revisions might not be enough to ward off looming bilateral trade tensions.
“It’s likely to ease some of the pressure, but broader trade concerns, such as market access, regulatory challenges, digital trade, and intellectual property rights, remain,” Ajay Sahai, director general and CEO at the Federation of Indian Export Organisations, told The Loadstar.
“This reduction in import duties on several products of interest to the US makes American exports to India more competitive, which could be seen as a goodwill gesture aimed at improving trade tension,” he added.
Deepening the ties between the two are vital, as Indian shipments to the US make up some 18% of its total exports.
Over the past few years, the US has been India’s top trading partner, and the potential for bilateral trade development is rapidly growing due to the supply chain diversification in Asia, so it is generally believed that the Indian government will make every attempt to avoid trade conflict with the US.
According to the latest data, Indian exports to the US from April through December saw a 5.5% increase, while inbound flows ticked up just 1.9%.
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