Tariff On Import Cars In IndiaImage Credit source: Chatgpt AI Photo
The ongoing free trade agreement negotiations between the EU (European Union) and India are now at a crucial juncture. According to sources, India has planned to reduce the tariff on cars imported from the European Union from 110 percent to 40 percent. This is considered to be the biggest initiative so far, as both sides are about to complete negotiations on a free trade pact, which can happen on Tuesday.
Two sources told Reuters that under this scheme, the government has agreed to immediately reduce taxes on selected vehicles coming from 27 countries of the European Union. The thing to note here is that this deduction will be applicable on those vehicles whose import price is more than 15000 Euro (approximately Rs 16 lakh 26 thousand 420). With this decision of the government, European car manufacturers will get a better opportunity to enter India.
Big relief for these companies
Sources say that the rate of 40 percent is not permanent, there is a plan to gradually reduce it to 10 percent over time. This means that the government wants to open India’s doors to European companies in a phased manner in the coming times. This decision of the Indian government will make it easier for European automobile companies like Volkswagen, Mercedes-Benz and BMW to access the Indian market.
Till now, high rates were a headache for the companies, but the government’s decision can give big relief to these companies. The sources declined to be identified because the talks are confidential and could be subject to last-minute changes.
EV will be out of import duty cut
Two sources said that to protect the investments made in this new sector by domestic companies like Mahindra & Mahindra and Tata Motors, battery electric vehicles will be kept out of import duty reduction for the first five years. After five years, similar duty reduction will be applicable on EVs also.
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