Indian Markets Sluggish: PM’s EV Tariff Cuts to Blame?

Indian stock markets experienced a notably slow day today, with trading volumes subdued and major indices showing minimal movement. The BSE Sensex hovered around a modest 0.2% decline by midday, while the Nifty 50 remained nearly flat, reflecting a lack of decisive momentum among investors. Analysts are pointing to a mix of factors for the tepid performance, with speculation swirling around the impact of Prime Minister Narendra Modi’s recent decision to reduce tariffs on foreign EVs.

Earlier this month, the Indian government announced a tariff reduction on over 30 imported items, including luxury goods and EVs, as part of a broader trade strategy ahead of PM Modi’s meeting with U.S. President Donald Trump. Reports suggest that import duties on EVs could drop from as high as 110% to as low as 15%, provided manufacturers commit to significant domestic investment.

Experts attribute the lethargy of the day to uncertainty over how the reduction of these tariffs may impact India’s nascent EV industry. “The reduction of tariffs on EV imports has injected uncertainty,” said Mumbai-based Horizon Financial Services senior analyst Priya Sharma. Investors are cautious of the competitive squeeze that this can bring on home players such as Tata Motors and Mahindra & Mahindra, which are increasing EV offerings. The market is clearly in wait-and-watch mode.

EV-Related Shares Get Hit

The news has hit EV-related shares the most, with many of the industry’s leading players recording significant falls in their share prices today. Here is the list of the falls recorded until midday:

• Tata Motors: The share fell by around 5.8%, reflecting the concern of investors about its leadership in India’s EV market.Tata, which holds over 44% of the electric car market share as of January 2025, could face stiffer competition from foreign players like Tesla if the tariff cuts are formalized.
• Mahindra & Mahindra (M&M): The stock dropped by about 6.2%, as the market digested the potential impact on its growing EV lineup, including models like the e-Verito and upcoming electric SUVs. M&M’s focus on domestic production may face pricing pressure from cheaper imports.
• Hyundai Motor India: Shares declined by roughly 5.5%, amid buzz that the company’s plans to expand its EV offerings in India could be disrupted by the influx of foreign competitors benefiting from lower tariffs.
• Olectra Greentech: A key player in electric buses, Olectra saw its shares slide by 4.3%, as investors weighed the implications for its commercial EV segment, which relies heavily on government contracts and domestic manufacturing incentives.
• Exide Industries: A leading battery producer for EVs, Exide’s stock dipped by 3.9%, reflecting concerns that cheaper imported EVs with integrated battery frameworks seem diminish demand for standalone battery suppliers.

Broader Market Estimation

Whereas the duty cuts have shaken the auto segment, not all specialists concur they are the sole reason for today’s drowsy advertise. “It’s too early to pin this entirely on the EV tariff decision,” argued Vikram Patel, chief market strategist at Delhi-based Pinnacle Investments. “Global cues, including a cautious stance from U.S. markets ahead of inflation data, and profit-taking after recent gains, are also contributing to the lackluster performance.” Posts on X earlier today echoed this sentiment, with some users noting a sell-off in broader financial stocks like ICICI Bank (down 2.1% between 9:40 and 9:45 AM IST) alongside the auto sector declines, suggesting a market-wide reaction rather than an EV-specific slump. Others speculated that the tariff reduction remains unconfirmed by the government, labeling it as “media buzz” rather than policy fact—yet the market reacted nonetheless.

What’s Next?

If the tariff cuts are officially notified, analysts predict a potential 10-30% reduction in EV prices in India, which could boost adoption but also slash the resale value of existing EVs by 20-40% overnight.

As the day wears on, everyone will be waiting to see if such early dips in EV-related stocks continue to deepen or stabilize, and if the overall market can shake off its present sluggishness. Till then, rumors of the reduction in tariffs have indeed relegated India’s auto industry to the sidelines, leaving investors on tenterhooks.