India-USA Interim Trade Deal To Bring Down Prices of Motorcycles, Luxury Cars

India recently entered into an interim trade agreement with the United States that will substantially lower tariffs on premium American automobiles, while deliberately leaving electric vehicles outside the scope of the deal. Under the new framework, India will slash duties on premium U.S. passenger cars with engine capacities exceeding 3,000cc to 30 percent from as high as 110 percent.

This new policy is set to bring down prices of fully-imported vehicles from American carmakers such as Jeep. According to Reuters, concessions are expected to take effect once the agreement is formally finalised, which is likely to happen around March. The lower duty will be applicable on a specified number of vehicles. Reports further clarified that lower and mid-tier automobiles will not get tariff concessions under the trade deal.

Tesla left out, Harley-Davidson to enjoy free duty

However, Electric vehicles have been kept out of this deal as of now. This means EV makers, particularly Tesla, will not benefit from this new policy. Tesla entered the Indian market in May last year with the Model Y, but the crossover has struggled to gain traction, with sales falling short of expectations. 

The report further adds that fully-built Harley-Davidson motorcycles in the 800–1,600 cc segment will be granted zero-duty access once the framework comes into effect — a concession that earlier US administrations had sought but failed to secure. Harley-Davidson sold only 187 fully imported motorcycles in the 800–1,600 cc category in the first nine months of the fiscal year, underscoring the segment’s limited scale. 

Also READ: India, US Sign Framework for Interim Trade Agreement: Preferential Tariffs on Auto Parts, ACMA Responds

The report further adds that the concessions have been applied specifically for the Milwaukee-based bikemaker and no other brand. At present, imported Harley-Davidson motorcycles in India attract an import duty of 44 percent.

Auto components, other sectors to benefit

Commerce Minister Piyush Goyal has stated that once the interim trade agreement comes into force, select Indian auto components will gain zero-duty access to the US market, while others will be subject to an 18 percent tariff. Beyond automobiles and aircraft parts, sectors such as pharmaceuticals, jewellery, textiles, footwear, handicrafts, agriculture, seafood, data centre infrastructure, and raw materials are also expected to benefit. The deal also eases compliance norms, streamlining cross-border business operations.