The Indian auto sector is in the spotlight as the tariff war becomes even more heated. US President Donald Trump has criticised India’s high import tariffs on cars, threatening to impose similar levies on Indian goods. The development is particularly relevant as Tesla’s India entry plans firm up.
So far, most analysts have played down concerns about either Tesla or tariff and the gains on the Nifty Auto Index seem to be confirming the market’s conviction as well. Several auto stocks are up smartly with component makers like Samvardhan Motherson up 3.60%, followed by Apollo Tyres, which was up 2.20%. Bharat Forge also clocked 2% gains. Leading automtove manufacturers like Mahindra & Mahindra (M&M) and Tata Motors are also trending higher.
Trump Versus India: The tariff tussle
US President Donald Trump has once again targeted India’s high import duties on cars, which can go up to 110%. In a recent speech to Congress, he announced that from April 2, the US will introduce reciprocal tariffs, meaning Indian exports to the US could face higher taxes in response. The US has been pressuring India to lower car import duties as part of a trade deal. However, as per the Reuters report, it suggests that while India is open to gradual reductions, an immediate cut is unlikely.
Elon Musk has long criticised India’s high import taxes, calling them among the highest in the world. These tariffs were a major reason why Tesla delayed its India launch despite the country being the third-largest car market globally.
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Tesla’s entry into India may not significantly impact the local EV market, as per a report by UBS. As per the brokerage report, the Model 3, Tesla’s best-selling car in the US, is unlikely to suit Indian roads due to its low ground clearance (138mm) and sedan design. Instead, the Model Y, a more relevant option for India, could come with a Rs 50-60 lakh price tag, including a 15% customs duty. This puts it in competition with high-end EVs like the Kia EV6, BYD Seal, and Hyundai Ioniq 5,
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