India-US trade deal: Duty-free Harleys, cheaper cars but does Tesla benefit?

India and the United States have moved a step closer to sealing an interim trade agreement. This will also impact the automotive sector. Under the proposed pact, India will allow zero-duty access for large American motorcycles. This move will particularly benefit Harley-Davidson, while also offering tariff concessions on select high-end US cars.According to government officials, as cited by PTI, the agreement will eliminate import duties on motorcycles with engine capacities ranging from 800 cc to 1,600 cc and above, once the pact is implemented. This is a significant shift, as India had only recently lowered duties on such bikes. In 2025, import tariffs on completely built-up motorcycles up to 1,600 cc were reduced from 50 per cent to 40 per cent, while those above 1,600 cc saw duties cut from 50 per cent to 30 per cent. The new agreement goes a step further by bringing duties down to zero for large-capacity bikes.

The move directly benefits Harley-Davidson. Although India remains a relatively small market for premium motorcycles and the US share in this segment is limited, the decision carries symbolic and commercial importance. Harley-Davidson currently operates in India through a partnership with Hero MotoCorp, announced in October 2020. Under this arrangement, Hero develops and sells Harley-branded motorcycles, manages service and parts, and retails accessories, riding gear and merchandise through dedicated dealerships and its wider network.Beyond motorcycles, the interim trade pact also offers relief on the car side. India will provide duty concessions on imported US cars, specifically diesel vehicles with engine capacities of 2,500 cc and above and petrol vehicles of 3,000 cc and above. For high-end internal combustion engine cars exceeding 3,000 cc, tariffs will be reduced to around 30 per cent over a phased period of up to 10 years. Earlier, import duties on such luxury vehicles could go as high as 110 per cent.In return, the US will remove reciprocal tariffs on certain auto parts imported from India, while some components will continue to attract duties of up to 18 per cent. A joint statement on the interim trade pact has already been issued, and the agreement is expected to be signed by mid-March.

India-US trade deal: Does Tesla benefit?

However, one notable exclusion from the deal is electric vehicles. Officials have clarified that EVs are not part of the tariff concessions. With several local manufacturers investing heavily under schemes such as the Production-Linked Incentive programme, the government appears keen to shield the sector from foreign competition at this stage.This exclusion means US-based EV maker Tesla does not benefit from the agreement. Any Tesla model imported into India will continue to face steep import duties, keeping prices high. Currently, the company sells its Model Y in India.