The United States seeks the elimination of car tariffs in a trade deal with India, but India is reluctant to reduce duties to zero immediately. The tariffs, which can reach 110%, have caused concerns for Tesla and triggered responses from U.S. officials calling for action. India’s domestic automotive industry is wary of lowering tariffs due to potential negative impacts on local manufacturers.

The United States seeks to establish an agreement with India to eliminate tariffs on car imports, as formal discussions for a trade deal are anticipated to commence soon. However, India is hesitant to reduce these tariffs to zero, although it is open to further reductions. Currently, tariffs on imported automobiles in India can reach as high as 110%, prompting Tesla’s CEO Elon Musk to express concerns regarding these significant barriers to market entry.

In response to India’s high auto tariffs, U.S. President Donald Trump has expressed strong opposition, reiterating his commitment to addressing these issues during his congressional address and indicating the possibility of reciprocal trade actions. According to sources, the U.S. is advocating for a complete or minimal reduction in tariffs across most sectors, with the expectation for immediate action on automotive duties being particularly emphasized.

Though India has not outright rejected U.S. proposals, officials are weighing their response after consulting with domestic automotive industries. Following a recent meeting between President Trump and Prime Minister Narendra Modi, both nations aim to resolve tariff disputes and target a bilateral trade relationship of $500 billion by 2030.

During a visit to the U.S., Indian Commerce Minister Piyush Goyal has been engaging with various U.S. trade representatives in pursuit of productive dialogues regarding tariff structures. Despite the significant U.S. pressure for tariff reductions, India is gradually preparing for an environment of lower tariffs while seeking input from its local manufacturers about their concerns with complete zero tariffs.

India’s automotive market, ranked among the largest globally with a production capacity of four million vehicles annually, is significantly shielded. Domestic automakers such as Tata Motors and Mahindra & Mahindra have voiced apprehensions that reducing import tariffs could undermine local investments and adversely affect the burgeoning electric vehicle sector. Recently, India has made strides towards liberalization by reducing tariffs on various high-end imported items while indicating intentions to reassess taxes on luxury automobiles.

The United States is pushing for a trade deal with India that includes the elimination of tariffs on car imports, which currently are among the highest globally. While there is an openness to discuss tariff reductions, India remains cautious, considering the impact on its domestic automotive sector. Ongoing dialogues between the two nations aim to pave the way toward a resolution of trade barriers and achieving substantial bilateral trade in the coming years.

Original Source: www.thehindu.com

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