New Delhi:
In its Union Budget 2025-26, India has significantly slashed customs duties on high-end motorcycles, cars and smartphone parts, a move that seems to give a boost to American companies like Harley-Davidson, Tesla and Apple, after US President Donald Trump called out New Delhi as a “tremendous tariff maker.”
However, according to Finance Minister Nirmala Sitharaman, custom duty rationalisation was introduced to ensure the Indian economy becomes aatmanirbhar (self-reliant), and was not a signal amid Mr Trump’s tariff announcements.
“We are looking at our own economy. We are looking to strengthen the foundation of the Indian economy, to make it a manufacturing hub,” she said while speaking exclusively to NDTV’s Sanjay Pugalia.
Harley Davidson To Get Cheaper In India
In her budget speech on Saturday, Ms Sitharaman announced that import duty on high-end motorcycles, with an engine capacity of up to 1,600 cc, which are imported as completely built-up (CBU) units, will see a reduction of 10 per cent to 40 per cent as against 50 per cent earlier.
Per the Union Budget 2025-26, the import duty on semi-knocked down (SKD) kits has been slashed to 20 per cent versus 25 per cent earlier. Moreover, the completely knocked down (CKD) units will now be taxed 10 per cent, against 15 per cent earlier.
The move will boost the import of quintessentially American Harley-Davidson motorcycles into India– high tariffs on which has long been a bone of contention between India and the US.
Harley-Davidson entered Indian markets in 2010 as part of the “mangoes for motorcycles” deal signed between India and the US in 2007. However, the American motorbike maker exited India about a decade later, in September 2020, as part of its broader additional cutbacks.
But a month later, Harley-Davidson motorcycles returned to Indian markets after MotoCorp Ltd formed a non-equity partnership with the American brand to make and sell its bikes in India. Today, Hero MotoCorp makes and sells the Harley-Davidson 440X-the smallest motorcycle in the company’s lineup.
During his first term in the White House, Mr Trump had raised the issue of 50 per cent import duty on Harley Davidson and said it was “unacceptable”.
Move To Attract Tesla?
Separately, Ms Sitharaman announced that the tariff rate on luxury cars, including station wagons and racecars, priced above $40,000 has been slashed to 70 per cent from 125 per cent levied earlier. She also announced that basic customs duties for the lithium-ion batteries used for electric vehicles in India have been totally scrapped.
A majority of the abovementioned EV makers are already present in India and are developing automobiles for Indian roads. But, the move could be an incentive for American companies like Tesla, which had been greatly eyeing the vast and emerging Indian EV market.
In April 2024, Tesla CEO Elon Musk made plans to visit India and meet PM Modi, sparking speculation of an investment into the country. However, he cancelled the visit due to his “very heavy Tesla obligations.”
The Apple Story
In budget 2025-26, Ms Sitharaman announced that 28 items in mobile phone battery production have been exempted from customs duty that arrive from countries like the US or China. The move is aimed at reducing the cost of mobile phones and accessories in India. It will also help boost local production, especially as India steadily evolving to become the world’s second-largest mobile phone manufacturer.
America’s Apple will benefit greatly from this import tax slash. According to a Reuters report, Apple has captured a 23 per cent share in total revenue during 2024.
India Jumping Hoops Amid Trump’s Tariff Threats?
With US President Trump looking to prioritise local industry under his “America First” trade policy, India’s latest move around import tax is being viewed as a strong signal to the American administration, as it seeks an assurance that the US will not raise taxes or impose additional trade barriers against Indian products.
Earlier, Trump had claimed that India imposes the highest tariffs on foreign goods among major economies and had threatened to introduce reciprocal tariffs on Indian products. He has also threatened to impose 100% tariffs on countries within the BRICS bloc–including India– if they attempted to move away from using the US dollar.
It is speculated that with tax cuts on imports, India is also aiming to take advantage of the US-China trade war and increase its own share of global supply chains. Trump tariffs are becoming global trade disruptors, leaving the market uneasy. With import tax cuts, India would be able to deal better with an otherwise unpredictable year, according to a Reuters report.