Investing.com -- The United States is pressing India to eliminate tariffs on car imports as part of a proposed trade agreement between the two countries, Reuters reported on Wednesday. However, the report notes that India is hesitant to immediately reduce these duties to zero, even as it contemplates further cuts.

The issue of India’s high auto tariffs, which can reach up to 110%, will be a key feature in the formal trade deal discussions that are yet to commence. This move could potentially pave the way for American electric vehicle manufacturer Tesla (NASDAQ: TSLA ), who is preparing for an India launch.

Tesla CEO Elon Musk has previously criticized India’s import taxes on cars as being among the highest globally. These steep tariffs led the EV giant to put on hold its plans to enter the world’s third-largest car market for the second time last year.

U.S. President Donald Trump has echoed Musk’s sentiments, repeatedly criticizing India’s high taxes. In a recent address to Congress, the President condemned India’s auto tariffs of more than 100%, even suggesting the possibility of reciprocal action.

According the report, the U.S. expects India to reduce tariffs to zero or close to zero in most sectors, excluding agriculture. It further noted that the U.S. expectation for India to eliminate auto tariffs is more pronounced than any other.

Another Reuters source revealed that India is "listening to the U.S." and has not resisted these demands. The country plans to respond with its stance on the tariffs after consulting with local industries.

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