The United States wants India to remove import taxes on cars as part of a trade deal. This move would help American car companies, especially Tesla, enter the Indian market more easily.

Right now, India's import tax on cars can be as high as 110%. Tesla's CEO, Elon Musk, has called this one of the highest taxes in the world. To prepare for its entry into India, Tesla has already rented its first showroom in Mumbai.

The showroom is in the Bandra Kurla Complex, a prime business area near the airport. Tesla signed a five-year lease, starting with an annual rent of about $446,000, which will increase by 5% every year.

Even though the U.S. is pushing for zero import taxes, India is being cautious. The government is discussing this issue with Indian car companies like Tata Motors and Mahindra & Mahindra. These companies are worried that removing import taxes will make foreign cars cheaper and hurt local car manufacturers.

The topic of car import taxes will be an important part of trade talks between the U.S. and India. Both countries want to grow their trade to $500 billion by 2030. Indian Commerce Minister Piyush Goyal is currently in the U.S. to discuss this with American officials.

This issue also came up when Indian Prime Minister Narendra Modi met with U.S. President Donald Trump. Both leaders agreed to work on trade problems and aim for a trade deal by the end of 2025. However, balancing foreign investment with protecting local businesses remains a challenge for India.