India-US Trade Deal Benefits Luxury Vehicles, But Elon Musk Misses Out

New Delhi: The recent interim trade agreement between India and the United States has paved the way for significant tax relief on heavy-engine vehicles, but electric vehicle manufacturers like Tesla remain unaffected, marking a setback for Elon Musk in India’s rapidly growing EV market.

Luxury Vehicle Tax Cuts

Under the agreement, India will completely eliminate import duties on Harley-Davidson motorcycles, allowing these premium bikes to be sold in India without additional taxes. Similarly, luxury cars from the U.S. will see a gradual reduction in import duties: from a previous high of 110%, duties will now taper to 30% over the next 10 years.

Tesla and Electric Vehicles Left Out

Despite the concessions for traditional vehicles, electric vehicles (EVs) were excluded from tax relief. Tesla, led by Elon Musk, continues to face high import taxes in India, even as the company attempts to expand its presence in the country. Tesla began sales in India last year and recently opened its first office in Mumbai. The trade deal’s exclusion of EVs is a major setback for Tesla, as lower taxes would have enabled more competitive pricing.

Musk and Trump: A Complicated History

Elon Musk has long been closely associated with former U.S. President Donald Trump, having supported him financially and politically during elections. Musk was also entrusted with leading DOGE (Department of Government Efficiency), a Trump initiative aimed at reducing government spending and optimizing jobs, a role that drew global scrutiny and impacted Tesla’s sales and stock performance.

However, the relationship soured during Trump’s second term. Musk stepped away from DOGE, and the two clashed over new U.S. legislation on taxes and spending. Public disagreements on social media eventually widened the rift between them.

India’s Car Market and Trade Context

India is the third-largest car market in the world, after the U.S. and China, and has historically maintained high import duties (70–110%) to protect domestic automobile manufacturing. Currently, India imports very few vehicles from the U.S., but Harley-Davidson and other luxury motorcycles will benefit from the trade deal’s tax reductions.

In contrast, electric vehicles remain heavily taxed, setting India apart from EU trade agreements, where India agreed to reduce duties on certain EVs to as low as 10%.

The deal represents a win for luxury gasoline-powered vehicles, but for Tesla and Elon Musk, India’s EV ambitions remain a costly challenge.