- India will slash tariffs on European ICE cars from 110 to 40 percent.
- European carmakers currently hold less than 4 percent market share.
- Local market is projected to grow from 4.4M to 6M units by 2030.
For years, India has been extraordinarily protective of its local car industry, slapping hefty tariffs on imported vehicles to encourage buyers to shop local. Now, the country has revealed that duties on cars from the European Union will be slashed from as high as 110 percent to 40 percent.
Final details of the new trade agreement between India and the EU will be announced later this week, but India has proposed cutting tariffs on EU cars to 40 percent for approximately 200,000 combustion-powered models annually. These tariffs will later be reduced to 10 percent.
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In order to protect local firms like Mahinda & Mahindra as well as Tata Motors, BEVs would be excluded from the tariff cuts for the first five years. After that, European BEVs would also benefit from slashed tariffs.
Vehicles eligible for the tariff reduction would each need to cost more than €15,000 ($17,700), ensuring that affordable, locally produced models from companies such as Maruti Suzuki don’t face too much competition from Europe.
As noted by Reuters, final details of the new trade deal are still being ironed out, and some aspects are still subject to change.
India is the world’s third-largest new-car market, behind only the United States and China. European carmakers currently account for less than 4 percent of annual sales and will no doubt view the nation as a region where they can grow sales considerably. Last year, approximately 4.4 million new cars were sold in India, and this figure is expected to grow to around 6 million by 2030.
In addition to the free trade pact opening up imports of European-made vehicles, it could also benefit India’s exports of textiles and jewellery, which are currently subject to 50 percent tariffs from the US.
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