India has been a land of imported cars and motorcycles for a long time, even before foreign automakers started selling vehicles officially in India. However, most of these have been from Japan and Europe. US carmakers did try a taste of India such as Ford and Chevrolet, but had to quit owing to bad sales. Now, with import taxes being cut, can such companies make a comeback? Or can there be new carmakers entering India?
Import Tax reduction — What can it mean for US automakers?
The 2025 Budget announcement saw India cut down on import duties for high-end motorcycles, cars, and smartphone parts. This highlights two big automakers — Harley-Davidson and Tesla. Harley first made its entry into India in 2010 and exited about 10 years later. The brand made a re-entry and pricing has always been a concern.
Now, with import taxes being slashed by 10 percent for CBUs with engine capacity up to 1,600cc, Harley will have an advantage here. The company will further have an advantage with semi-knocked down (SKD) units as they have seen a 5 percent reduction in tax, while completely knocked down (CKD) units will see only 10 percent tax instead of 15 percent.
This will also make way for Tesla to enter India after a long battle with the Indian government, which has been asking Tesla to set up a factory in India. The Budget announcement had seen a slash in tax to 70 percent from 125 percent for luxury cars, including station wagons and racecars, priced above $40,000 (Rs 35 lakh).