Finance Minister Nirmala Sitharaman clarified that these reductions are part of India’s broader strategy to make its economy more self-reliant, rather than a direct response to US President Trump’s criticism of India’s tariffs

Ahead of Prime Minister Narendra Modi’s highly-anticipated US visit, India has made a notable move by reducing customs duties on several American products, including Harley-Davidson motorcycles. This decision could set an encouraging atmosphere for Modi’s upcoming meeting with US President Donald Trump, who has been vocal about India’s “high tariffs.” The meeting is expected later this month, though no official date has been finalized.

Significant tariff cuts on popular US imports

The government, in the 2025-26 Union Budget, announced significant reductions in customs duties on various high-profile imports. Among the most high-profile changes is a 10% reduction in the import duty on Harley-Davidson motorcycles. The new duty on these high-end bikes, which have long been a point of contention between India and the US, will now be 40%, down from 50%. Additionally, the import duties on semi-knocked-down (SKD) kits have been reduced from 25% to 20%, while completely knocked-down (CKD) units will be taxed at 10%, down from the previous 15%. These moves are expected to benefit American companies like Harley-Davidson, which has had a fluctuating presence in India.

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Harley-Davidson originally entered the Indian market in 2010 under the “mangoes for motorcycles” agreement between India and the US. However, in 2020, it exited the market due to declining sales. A month later, the brand returned through a non-equity partnership with Hero MotoCorp, which now produces the Harley-Davidson 440X, the smallest model in the lineup. This tariff reduction could further boost the sales of American motorcycles in India.

In addition to motorcycles, India also slashed the import duties on luxury cars, including race cars and station wagons, priced over $40,000. The tariff on these vehicles has been reduced from 125% to 70%, making high-end American cars more affordable in the Indian market. The move could benefit manufacturers like Tesla, which has shown interest in expanding in India’s growing electric vehicle (EV) market.

The government also eliminated basic customs duties on lithium-ion batteries used for electric vehicles, making it easier for companies to bring EV components into the country. This change is seen as a step to foster the growth of India’s electric vehicle sector, with companies like Tesla potentially eyeing investment in the country’s EV ecosystem.

A strategic economic shift

Finance Minister Nirmala Sitharaman clarified that these reductions are part of India’s broader strategy to make its economy more self-reliant, rather than a direct response to US President Trump’s criticism of India’s tariffs. She stressed that the move is aimed at strengthening India’s manufacturing capabilities and positioning the country as a global manufacturing hub.

In addition, the Centre slashed duties on several mobile phone production components, which could benefit companies like Apple. This is expected to lower the cost of mobile phones and accessories in India, helping local production grow as India aims to become the world’s second-largest mobile phone manufacturer.

Taking India-US trade ties to the next level

The decision to lower tariffs is being seen as a positive gesture toward the US, signalling India’s commitment to improving trade relations. President Trump had previously accused India of having some of the highest tariffs on foreign goods and had threatened reciprocal tariffs on Indian products. By reducing duties on high-profile imports, India hopes to foster stronger ties and avoid any further trade friction.

As global trade dynamics shift due to the US-China trade war, India’s tariff cuts could help the country attract more foreign investment, particularly from the US. With this move, India is positioning itself as an attractive destination for businesses looking to diversify their supply chains outside of China. This shift could play a significant role in enhancing India’s standing in global markets, paving the way for stronger economic relations with the US in the coming years.