The ongoing India-EU trade deal is set to slash tariffs on imported cars to 40 percent from the current 110 percent, opening the market to international competition. This reduction in import duty would be applicable on a limited number of cars imported to India from the EU via the CBU route (Completely Built Units).
Currently, this number is set to 2.5 lakh imported cars for all brands combined, but is subject to change. Additionally, for this reduction to apply, the import price of these individual units must not be less than 15,000 Euros (₹16.16 lakh), and must be imported from anywhere within the 27 nations that are part of the European Union. Interestingly, a similar deal already exists between India and the UK, making the Volkswagen Tiguan (along with other models imported from the UK) significantly cheaper than its CBU version.
It was also affirmed that this import duty will be lowered to 10 percent within five years, making imported cars from the EU much more affordable than ever before in India and simultaneously allowing an ease of market access for European manufacturers like BMW, Volkswagen, and Mercedes-Benz, all of whom have set up manufacturing units in India. This will be particularly beneficial to premium marques like Porsche, Ferrari, Maserati, and Lamborghini, who do not prefer to manufacture abroad.
Sources also clarified that for at least the first five years, this reduction in import duty will be exclusively applicable on ICE cars, and not on EVs. This way, the government aims to protect the domestic EV manufacturers like Tata and Mahindra from international market competition. Five years from now, similar reduction in import duty may be applicable on Europe-imported EVs as well.
This may have a major effect on the Indian automakers, since the potentially lowered prices may compel domestic manufacturers to upgrade their models currently in the market. Alternatively, this might also lead to an overall drop of car prices across the Indian market to allow for competitive pricing. For the enthusiasts, it marks quite a remarkable moment for their savings to be finally put to use.
