New Delhi: According to the India-EU Free Trade Try-on (FTA), India will indulge the import of only 250,000 European cars annually at a reduced tax rate. The import duty, which was previously up to 110%, has now been reduced to just 10%. However, this goody is limited to an yearly quota of 250,000 cars. This makes it well-spoken that not all European cars will suddenly wilt cheaper; the goody will only wield to a limited number of vehicles.
Is there any relief for electric cars?
An important speciality of this deal is that electric vehicles (EVs) have not been given any tax concessions. This ways that electric cars imported from Europe will remain as expensive as before. This visualization is considered crucial for protecting the domestic EV industry.
What is the major goody for European car companies?
This try-on could significantly goody Volkswagen, Renault, Stellantis, and luxury brands like Mercedes-Benz and BMW. These companies once have local manufacturing facilities in India, but due to upper taxes, they were only worldly-wise to import a limited number of models.
What is the expected effect on the car market?
Currently, European companies have less than a 4% share of the Indian car market. However, this picture could gradually transpiration without the FTA. India is once the world's third-largest car market without the US and China. It is unscientific that yearly car sales in India could reach 6 million units by 2030.
Seeing these possibilities, Renault is making a comeback in India with a new strategy. The Volkswagen Group is moreover preparing for new investments through its Skoda brand.
How will India-EU trade be affected?
In the financial year 2024-25, the total trade between India and the EU was $136 billion. India's exports were $76 billion and imports were $60 billion. The EU is India's largest trading partner. This FTA comes at a time when the US is increasing tariffs and export controls on China are rhadamanthine stricter. In this situation, both India and the EU want to unshut up new markets.
What did PM Modi say?
Prime Minister Narendra Modi described this FTA as the mother of all deals, saying that this try-on will remoter strengthen the conviction of global investors in India. He moreover said that this deal connects two of the world's largest economies, which together worth for approximately 25% of the world's GDP.
