India’s Budget Cuts Tariffs With Eye On US Trade And Trump Criticism

India- West News Desk

NEW DELHI – India’s Union Budget for 2025-26 includes significant tariff reductions on high-end motorcycles, luxury cars, and smartphone components, moves that could potentially benefit U.S. companies like Harley-Davidson, Tesla, and Apple. The cuts come as President Donald Trump has publicly criticized India’s trade policies, labeling it a “tremendous tariff maker” and urging changes to make the country’s trade practices more favorable to U.S. interests.

Finance Minister Nirmala Sitharaman defended the tariff cuts, emphasizing that the changes were part of a broader strategy to strengthen India’s manufacturing sector. “We are looking at our own economy. We are looking to strengthen the foundation of the Indian economy, to make it a manufacturing hub,” she stated. Despite these claims, the timing of the reductions is seen by many as a response to growing international trade tensions, particularly with the United States.

Trump, who has repeatedly criticized India’s high tariffs, especially on motorcycles, has threatened to impose reciprocal tariffs on Indian exports if the country does not make changes. He also warned of a potential 100% tariff on goods from BRICS nations, including India, if these countries reduce their reliance on the U.S. dollar. This backdrop has prompted India to re-evaluate its tariff policies to mitigate the risk of potential U.S. trade actions.

Harley-Davidson

Among the most notable changes, the budget cuts import duties on high-end motorcycles with engine capacities up to 1,600 cc, reducing the tariff from 50% to 40% for completely built-up units. This reduction could significantly benefit U.S. motorcycle manufacturer Harley-Davidson, making its products more accessible to Indian consumers. Trump had previously criticized India’s 50% import duty on Harley-Davidson motorcycles, calling it “unacceptable,” further fueling the push for change in trade relations between the two countries.

Tesla

The budget also reduces tariffs on luxury cars priced above $40,000. This move is expected to benefit high-end car manufacturers like Tesla, which has shown interest in entering the Indian market. Tesla CEO Elon Musk has been flirting with the idea of setting up a plant in India, with PM Narendra Modi earmarking his state of Gujarat for it. The tariff reduction may now make India a more attractive market for Tesla’s electric vehicles.

Apple

India’s budget also supports its thriving mobile phone manufacturing sector by removing customs duties on 28 items used in mobile phone battery production. This reduction aims to reduce manufacturing costs and boost local production capabilities. India is the world’s second-largest mobile phone manufacturer, and these measures could be particularly advantageous to companies like Apple, which held a 23% share of total revenue in the Indian market in 2024, according to Reuters.