The European Union is pressing India to remove tariffs on automobile imports as part of a long-delayed trade agreement, and the Central government is allegedly prepared to improve its existing proposal to conclude the talks, sources informed Reuters.
India is willing to slowly lower tariffs to 10% from more than 100%, as per two industry insiders and a government representative. This action occurs despite pressure from the local automotive sector, which has advocated for India to uphold a minimum 30% tariff, even if it begins reducing the tax.
According to Reuters, the industry seeks a postponement of tariff cuts on electric vehicles (EVs) for the upcoming four years to safeguard domestic producers. The EU’s requests follow the US administration under President Donald Trump, which pursued a comparable elimination of tariffs on automobiles, including EVs, during bilateral trade talks with India.
These advancements are increasing pressure on India's local car manufacturers. Lowering tariffs would benefit European automakers like Volkswagen, Mercedes-Benz, and BMW, increasing their market opportunities in India.
Like its suggestion to the US, India's automotive sector has proposed an immediate tariff reduction on a restricted range of petrol vehicles from over 100% down to 70%, with subsequent gradual reductions to 30%. According to sources that spoke to Reuters, car manufacturers have asked for no tariff cuts on EVs until 2029, after which a gradual decrease to 30% would be implemented for a select number of imports.
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