NEW DELHI (Diya TV) — The European Union is calling on India to lower car import tariffs as part of a decades-old trade agreement that has stalled, repeating an earlier call made by the Trump administration, Reuters said.
According to sources close to the negotiations, Reuters reported that the Indian government may consider reducing auto import duties to 10%, a steep reduction from the over 100% currently in force. Although the proposal has yet to be formally announced, trade analysts indicate that such a move would be a sign of increased dynamism in negotiations between the European Union and India, which have been taking place for the past few years.
India’s well-protected car industry, which produces nearly 4 million vehicles annually, is facing mounting pressure as global trade flows transform. Domestic players such as Mahindra and Mahindra are lobbying for retaining tariffs of at least 30%, stating a high tariff is a necessity to safeguard domestic players against a flood of imports. They also want tariffs on electric vehicles to remain unchanged, at least for four more years.
Though opposed by the industry, India’s commerce ministry last week secretly reviewed the EU’s latest proposal in a meeting between the nation’s top automakers and the heavy industries ministry, Reuters said. European automakers such as Volkswagen, Mercedes-Benz, and BMW would gain tremendously from any tariff cuts. Tesla, too, would gain traction in the Indian market, with its electric cars made in Berlin to be rolled out in the country later this year.
While it is not certain whether India has officially made the new tariff offer, analysts believe that both nations can be accommodating in the face of concerns of a slowdown in global trade and the residual impacts of Trump’s trade tensions. India-European Union free trade agreement talks are likely to be concluded by 2025, and the resulting deal will redefine the future of automobile importations in the world’s giant emerging market.
