India-EU FTA: European Carmakers Can Export 1.6 Lakh Cars Annually

The India-European Union free trade agreement (FTA) is set to provide a significant boost to European automobile manufacturers looking to export vehicles to India. Under the proposed pact, European carmakers will be eligible for concessional import duties on passenger vehicles, with the annual quota increasing gradually over time.

The agreement allows European carmakers to initially ship up to 1 lakh passenger vehicles every year under a tariff-rate quota (TRQ). This limit will rise steadily and reach 1.6 lakh vehicles annually from the 10th year of implementation. The concessions will apply to internal combustion engine (ICE) and hybrid electric vehicles (HEVs) manufactured in the EU, but only for vehicles priced above Euro 15,000.

For vehicles priced between Euro 15,000 and Euro 35,000, the import duty will decline from the existing 110% level to 35% in the first year and further reduce to 10% by the fifth year. For cars priced above Euro 35,000, duties will fall from 66% to 30% initially before reaching 10% over the same period. The quota will include separate categories based on vehicle prices, with 43,000 units reserved for cars priced above Euro 50,000 from the fifth year.

The agreement also includes provisions for completely knocked-down (CKD) vehicles. The quota for ICE and hybrid CKD vehicles will begin at 75,000 units annually for the first five years before gradually declining to 50,000 units from the 10th year. Battery electric vehicles (BEVs), plug-in hybrids and other technologies will receive concessions from the fifth year onwards, but only for vehicles priced above Euro 20,000.

The CBU quota for such vehicles will start at 20,000 units in the fifth year, rise to 50,000 units by the 10th year and eventually reach 90,000 units annually from the 14th year. The proposed tariff structure is expected to provide European automakers greater access to India’s growing passenger vehicle market, while offering consumers more international vehicle options.

Maharashtra is expected to play a key role in driving India-EU FTA opportunities, with Chief Minister Devendra Fadnavis proposing a Mumbai-Antwerp economic partnership with Belgium. The partnership is expected to boost trade and investment between the two regions.

The India-EU FTA is a significant development for the Indian automotive industry, which has been seeking greater access to international markets and technologies. The agreement is expected to increase competition in the Indian market, leading to better prices and more options for consumers.

Overall, the India-EU FTA is a positive development for the Indian economy, and is expected to have a significant impact on the country’s automotive industry. With the agreement set to come into effect in the near future, Indian consumers can look forward to a wider range of international vehicle options at competitive prices.

The Indian government has been working to increase trade and investment with the EU, and the FTA is a major step in this direction. The agreement is expected to boost economic growth and create new job opportunities in the country.

In conclusion, the India-EU FTA is a significant development for the Indian automotive industry, and is expected to have a major impact on the country’s economy. With the agreement set to come into effect in the near future, Indian consumers can look forward to a wider range of international vehicle options at competitive prices.