Trade deal may open doors for US cars but right-hand-drive rules limit options

Ford Mustang

• Most US-made cars are not compatible with Indian driving laws
• US is left hand drive market whereas India is right hand drive
• Except for the Ford Mustang, no other likely models to benefit from the deal

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The interim India–US trade agreement could significantly reduce import duties on large-capacity vehicles but its real-world impact on the Indian car market is expected to be minimal. Most US-made cars are not compatible with Indian driving laws, which mandate right-hand-drive (RHD) vehicles.

Under the proposed deal, India will initially lower tariffs on diesel cars above 2,500cc and petrol cars above 3,000cc to 50 percent before reducing them further to 30 percent over a 10-year period.

While this appears to create an opportunity for high-capacity American vehicles, structural and regulatory challenges mean that only a limited number of vehicles can enter India.

Left hand vs right hand drive 

The United States manufactures left-hand-drive (LHD) vehicles, while India is an RHD market. Converting LHD vehicles to RHD is expensive, complex and often not undertaken by manufacturers unless volumes justify the investment.

Ford Mustang: The Lone Contender

Among American manufacturers, Ford stands out as the only brand with a viable RHD petrol model above 3,000cc. The Ford Mustang, Ford’s iconic muscle car, is the only US-built Ford model available in factory RHD configuration.

The Mustang was launched in India in 2016, getting an enthusiast reception with its V8 performance and global appeal. However, due to high prices, limited demand and changing emissions norms, the model was discontinued within five years.

Following Ford’s exit from India in 2021, the Mustang remains the brand’s only theoretical candidate for re-entry under the new trade framework, as other models have downsized engines or transitioned to electric powertrains.

Jeep: The strongest US brand in India

After Ford’s exit, Jeep is the largest US automotive brand operating in India.

Owned by Stellantis, Jeep manufactures models such as the Wrangler, Grand Cherokee and Compass locally at its plant near Pune.

Some Jeep models benefit from lower import duties of around 15 percent, as they are brought into India as completely knocked down (CKD) kits before local assembly.

Jeep’s Toledo assembly complex in Ohio does produce RHD versions of the Jeep Wagoneer but these vehicles are powered by engines smaller than 3,000cc and therefore fall outside the scope of the reduced-tariff category.

The Wagoneer brand is currently not available in India.

General Motors and Cadillac: No Immediate Path Back

General Motors (GM), another major US automaker, has had a chequered history in India. The company exited the Indian market in 2017, after operating through brands such as Chevrolet and Opel.

While GM has recently begun producing right-hand-drive Cadillac Lyriq electric SUVs, the company does not manufacture any non-electric RHD Cadillac sedans or SUVs that would qualify under the new tariff structure.

GM has no immediate internal-combustion offerings suitable for India under the trade agreement.

Limited impact

Despite the apparent liberalisation of import duties, India’s RHD regulations, engine-capacity thresholds and the shrinking portfolio of large petrol and diesel engines mean that the India–US trade deal is unlikely to flood the Indian market with American cars.

It may only reopen a narrow window for niche, enthusiast-focused models, with the Ford Mustang remaining the most realistic example.

Unless US manufacturers invest in dedicated RHD production for larger-capacity vehicles, the trade agreement’s impact on India’s automotive landscape will remain symbolic rather than transformative.