Budget 2025: India Cuts Import Duty On High-End Cars, Motorcycles In Boost To Harley Davidson, Tesla

In what is seen as a boost to Harley-Davidson Inc. and Tesla Inc., India has cut import duty on high-end motorcycles and cars after US President Donald Trump called out the country as a “tremendous tariff maker.”

Motorcycles with an engine capacity of up to 1,600 cc, which are imported as completely built-up (CBU) units, will now attract an import duty of 40% as against 50% earlier, as per the Union Budget 2025-26. The import duty on semi-knocked down (SKD) kits has been cut to 20% versus 25% earlier. The completely knocked down (CKD) units will be taxed at 10% as against 15% earlier.

Separately, the tariff rate on luxury cars priced above $40,000 has been cut to 70% from 125% earlier. These include station wagons and racecars.

When asked if the reduction is aimed at combating the US’ tariff policy, CBIC Chairman Sanjay Kumar Agarwal said, “The earlier rate was 50% if it’s in CBU condition. The rate was higher in the case of the SKD condition. So, we reduced it to 40%... The idea is to rationalise the rates.”

Speaking exclusively to NDTV Profit after the budget speech, Finance Secretary & Revenue Secretary Tuhin Kanta Pandey said, “The deductions have been demanded for motorbikes. The objective is to promote domestic manufacturing.”

NDTV Profit had previously reported that India is planning to cut customs duty on about 7-8 high-end products—including specialised steel, high-end motorcycles and electronic items—after Trump labelled China, India and Brazil as high-tariff countries.

To be sure, the import of Harley-Davidson motorcycles into India at high tariff rates has long been a bone of contention between India and the US.

During his first term as US president, Trump had said that the 50% import duty on Harley Davidson was “unacceptable” but acknowledged that his "good friend" Prime Minister Narendra Modi slashed the duty by half from 100%. 

The quintessentially American Harley-Davidson motorcycles first entered India in 2010 by way of a “mangoes for motorcycles” deal struck between the two countries in 2007. But just about a decade later, in September 2020, Harley-Davidson exited India as part of broader additional cutbacks. A month later, however, India’s largest two-wheeler maker, Hero MotoCorp Ltd., stepped up and formed a non-equity partnership to make and sell Harley-Davidson motorcycles in India.

Today, the Harley-Davidson 440X—the smallest motorcycle in the company’s lineup—is made and sold in India by Hero MotoCorp.

Tesla’s India story is similar.

In April 2024, Tesla CEO Elon Musk confirmed on X, formerly Twitter, his immediate plans to visit India and meet PM Modi, sparking speculation of an investment into the country. The government itself rolled out a red carpet of sorts with the announcement of the India EV policy, which was tailored to attract the likes of Tesla to make in India, for the world.

That visit, however, wasn’t to be due to Musk’s “very heavy Tesla obligations.”