India Plans Major Cut in Import Duty on EU Cars Under Free Trade Deal
Under the India-EU Free Trade Agreement, tariffs on imported cars could be reduced from 110% to 40%. This is expected to increase competition and investment in the Indian auto market.
India is planning to significantly reduce tariffs on imported cars under the proposed free trade agreement between India and the European Union (EU). According to Amar Ujala sources, tariffs on cars coming from the EU could be reduced from 110% to 40%. This reduction is considered the biggest initiative to open up the Indian automobile market so far.
Amar Ujala Sources stated that this reduced tariff will apply to a limited number of cars whose import price exceeds 15,000 euros. There may be a provision to gradually reduce this tariff to 10% in the future. This will facilitate European automakers' entry into the Indian market. European companies such as Volkswagen, Renault, Mercedes-Benz, and BMW are expected to benefit the most from the lower tariffs. The conclusion of long-running trade negotiations between India and the European Union is expected on Tuesday. Following this, the detailed provisions of the agreement will be finalized and approved by both sides.
European Council President António Luís Santos da Costa and European Commission (EU) President Ursula von der Leyen were welcomed with a guard of honor upon their arrival in India on Sunday. The two leaders arrived in Delhi to participate in the 16th India-EU Summit. Upon arriving in India, António Costa expressed his happiness and wrote on social media that he was honored to be in New Delhi on the eve of India's 77th Republic Day. He said that the partnership between India and the European Union continues to strengthen, spanning areas ranging from trade and security to the clean energy transition and people-to-people contacts. India will host the 16th India-EU Summit on January 27th.
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Currently, imported cars in India are subject to tariffs ranging from 70 to 110 percent, which has been consistently criticized internationally. India is the world's third-largest car market, but import duties are kept high to protect the domestic industry. According to sources, India may propose an immediate 40 percent tariff on approximately 200,000 petrol and diesel cars each year. However, this figure could change at the last minute. Battery-powered electric vehicles will not receive any duty relief for the first five years. This is intended to protect the investments of domestic companies like Mahindra & Mahindra and Tata Motors.
Currently, European companies have less than a 4% share of India's 4.4 million car market annually. The market is dominated by Indian companies Mahindra and Tata, along with Suzuki Motor. It is estimated that the Indian car market could reach 6 million units annually by 2030, prompting many foreign companies to invest.
