New US Deal Will Make Harleys Tax free With Duty On Limited Cars Reduced to 30 Percent

The cornerstone of the 2026 India-US pact is the targeted duty relief for high-displacement internal combustion engines. India has agreed to slash the Base Customs Duty (BCD) on US-made cars with petrol engines above 3000cc and diesel engines above 2500cc. T

he duty for these specific "Made in USA" vehicles has dropped from 110% to 30% for an initial quota of 15,000 units annually. This is a massive win for the iconic American V8 and large-capacity V6 engines that have historically been priced out of the Indian market.

This development comes very soon after India signed a Free Trade Agreement with the European Union on January 27.

The agreement aims to make luxury cars more affordable in India. Current high duties, ranging from 70% to 110%, discourage complete imports and promote local assembly. This change could benefit brands like Cadillac and Dodge or high-end models from Ford and GM, but the phased reduction means prices will not drop overnight.

Also Read: European Cars Get Cheaper in India Thanks to New FTA, But Who Really Benefits?

Just like in the India-Europe deal, electric vehicles are yet again excluded from these concessions, meaning no duty cuts for Tesla, which officially entered India last year. Bike lovers can be excited, though, as the deal sets zero import duty on US-made motorcycles. This could greatly help brands like Harley-Davidson and those planning to buy one.

One of the most talked-about aspects of this deal is the total exclusion of Electric Vehicles (EVs) from the tariff concessions. 

Despite intense lobbying from Tesla, the Indian government has maintained a strict protectionist stance for its domestic EV ecosystem (Tata and Mahindra). As of 2026, any EV imported from the US will continue to face the standard 70–110% duty. This means the much-anticipated price drop for the Tesla Model 3 or Model Y will not happen under this specific trade deal, keeping them in the ultra-luxury price bracket for the foreseeable future.

The benefits of this deal are restricted to vehicles with at least 35% value addition within the United States. This is a crucial distinction for brands like Jeep; while the Jeep Compass and Meridian are made in India (and thus unaffected), the high-end flagship models like the Grand Cherokee and Grand Wagoneer imported as CBUs (Completely Built Units) from the US will see price crashes.

 It also creates a massive opportunity for the return of Ford and General Motors, provided they export their RHD (Right-Hand Drive) American-made icons like the Mustang or Corvette to India.

The following table estimates the price impact of the duty drop from 110% to 30%. Note that while the Base Customs Duty has dropped, these cars still attract 28% GST and the 22% Luxury Cess applied to the landed value.

The biggest immediate winner is Harley-Davidson. India has agreed to completely eliminate the import duty on US-made motorcycles with engine capacities between 800cc and 1,600cc, moving from the previous 40% rate to zero duty on day one of the deal's implementation.

Image Source- Cadillac, Chevrolet USA