New Delhi:
In a strategic move to bolster its economic stance and avoid being labeled protectionist, India has reduced import duties on high-end motorcycles and cars in its 2025-26 Union Budget. This decision comes on the heels of US President Donald Trump’s recent tariff increases aimed at Canada, Mexico, and China, although India was not directly targeted.
Finance Secretary Tuhin Kanta Pandey emphasized that India is committed to a non-protectionist approach, even as global trade tensions escalate. “We don’t want to give anybody any signal that we would like to be protectionist,” Pandey stated, underscoring India’s intention to reduce its average tariff level to 11% from 13%.
India has made significant cuts in import duties on high-end motorcycles, reducing the tariff from 50% to 30% for fully-built imports with an engine capacity of up to 1,600 cc. Additionally, the import duty on semi-knocked down (SKD) kits has been lowered to 20% from 25%, and completely knocked down (CKD) units will now be taxed at 10% instead of 15%. These reductions are part of India’s broader strategy to support domestic companies and make the country a more attractive manufacturing hub.
The timing of these duty reductions is noteworthy, given the recent trade actions by the Trump administration. Trump’s latest executive orders have imposed 25% tariffs on imports from Canada and Mexico, and a 10% tariff on imports from China, effective from February 4, 2025. Despite Trump’s previous criticism of India’s tariff structure, the country was not included in the initial round of tariff increases.
India’s move to lower tariffs is also a response to the ongoing trade tensions and the need to project a welcoming environment for international trade. Pandey clarified that the tariff measures are intended to be phased out as domestic industries develop, ensuring that India’s economic policies remain aligned with global trade norms.
Trade and immigration issues are expected to be central topics when Indian Prime Minister Narendra Modi meets Trump later this month. The Trump administration has raised concerns about undocumented Indians living in the United States, a matter that India is addressing through ongoing dialogue with US authorities.
By reducing its tariffs and emphasizing a non-protectionist stance, India aims to strengthen its economic ties and position itself as a viable alternative for global manufacturers looking to diversify their supply chains away from countries like China.
