In a significant policy shift outlined in the Union Budget 2025-26, India has announced major reductions in import duties on high-end motorcycles, luxury cars, and electronic components. This move is expected to benefit prominent American brands like Harley-Davidson, Tesla, and Apple, especially as U.S. President Donald Trump continues his strong stance on trade tariffs.
However, Indian Finance Minister Nirmala Sitharaman emphasized that the duty reductions are part of India’s self-reliance initiative, Aatmanirbhar Bharat, and not a response to Trump’s tariff pressures.
“Our focus is on strengthening the Indian economy and enhancing our position as a global manufacturing hub,” Sitharaman stated in an exclusive interview.
Harley-Davidson Returns to India’s Market
Among the biggest beneficiaries of the new policy is Harley-Davidson, the renowned American motorcycle brand. The Union Budget 2025-26 cuts the import duties on completely built-up (CBU) motorcycles from 50% to 40%, making premium American bikes more affordable.
Additionally, duties on semi-knocked down (SKD) kits are reduced from 25% to 20%, while completely knocked-down (CKD) units will now face a 10% tax instead of 15%.
Harley-Davidson, which initially entered India in 2010 as part of the “mangoes for motorcycles” trade agreement, exited the Indian market in 2020 due to financial difficulties. However, its return through a partnership with Hero MotoCorp has ensured that models like the Harley-Davidson 440X continue to be sold in India.
Trump had frequently criticized India’s high tariffs on Harley-Davidson motorcycles during his presidency, labeling them as “unacceptable.” This latest reduction in duties may serve as a goodwill gesture to maintain favorable trade relations between the two countries.
India’s Push to Attract Tesla with Lower Tariffs on Luxury Cars and EV Batteries
India’s tariff reductions extend beyond motorcycles to include significant cuts in the automobile sector. The import duty on luxury cars valued over $40,000 has been reduced from 125% to 70%, making it easier for premium foreign automakers to enter the Indian market.
Tesla, which has long shown interest in India but hesitated due to high import costs, could be a key beneficiary of this change. Additionally, basic customs duties on lithium-ion batteries used in electric vehicles (EVs) have been completely eliminated, signaling India’s commitment to advancing electric mobility.
Tesla CEO Elon Musk had planned a visit to India in April 2024 to discuss potential investments with Prime Minister Narendra Modi, but the trip was postponed due to what Musk referred to as “heavy Tesla obligations.” This policy shift may reignite Tesla’s interest in establishing a production or assembly unit in India.
Apple Set to Benefit from Electronics Sector Boost
The Union Budget also includes provisions to support India’s electronics sector. A total of 28 components used in mobile phone battery production will now be exempt from customs duties, lowering the production costs for smartphone manufacturers.
Apple, which has gradually expanded its presence in India, stands to gain significantly from these changes. In 2024, Apple captured 23% of India’s smartphone revenue market share. As India becomes the world’s second-largest mobile phone manufacturer, the tariff reductions will further bolster Apple’s ambitions to establish India as a global production hub.
India’s Response to Trump’s Trade Strategies
Trump’s trade policies have created instability in global markets, with the U.S. president often criticizing India’s high tariff structure. He previously threatened to impose reciprocal tariffs on Indian goods and even suggested a 100% tariff on BRICS nations, including India, if they reduced their reliance on the U.S. dollar in global trade.
With the latest import duty reductions, New Delhi is strategically positioning itself in the evolving global trade landscape. By easing access for American firms, India is strengthening its ties with the U.S. while also protecting itself from potential disruptions caused by Trump’s aggressive trade tactics.
Experts suggest that this move will allow India to benefit from the ongoing U.S.-China trade tensions, as global supply chains seek alternative hubs.
While the Indian government maintains that these changes are purely part of its domestic economic reforms, the timing indicates a strategic effort to safeguard India’s trade interests amid growing protectionism worldwide.
Conclusion
India’s decision to reduce import duties on American motorcycles, luxury cars, and electronic components comes at a critical moment, with global trade tensions under Trump’s tariff policies continuing to escalate. Although the move is officially framed as part of India’s self-reliance and economic growth plan, it may also strengthen its trade relationship with the U.S. and create a more predictable trade environment in the year ahead.
Harley-Davidson, Tesla, and Apple are poised to benefit from these tariff cuts, and the coming months will show how effectively India balances its domestic growth goals while navigating the shifting global trade landscape.
