India May Cut Car Import Duty to 10% Under EU Deal, Auto Sector Reacts
India is reportedly open to slashing car import duties from the current rate of over 100% to as low as 10%, in a phased manner, as part of its long-pending trade agreement with the European Union. The proposed move could dramatically alter the landscape of India’s automotive market, which currently sees high protectionist tariffs. The government’s revised position aims to accelerate negotiations and finalise the agreement by 2025, as both regions seek enhanced trade relations amid global economic shifts.
The proposed reduction has raised concerns among Indian automakers, who argue that such a drastic cut could adversely affect domestic investments. They prefer a reduced rate of around 30%, phased over time, and want electric vehicle duties left untouched until 2029.
Impact On Domestic Automakers And Global Brands
A significant duty reduction could give European automakers such as BMW, Volkswagen, and Mercedes-Benz easier market entry into India, offering more competitive pricing. Tesla, too, may benefit from exporting models via its Berlin facility. However, Indian companies including Tata Motors and Mahindra & Mahindra are concerned about potential threats to local market share and profitability.
The stock market is expected to closely monitor these developments. If the government pushes forward with the 10% duty proposal, the Tata Motors share price and Mahindra & Mahindra share price could experience volatility due to increased competition. Investors are likely to assess how policy changes may impact the long-term growth of home-grown brands amid rising global competition. The ongoing discussions may significantly shape the future of India’s automotive trade and manufacturing priorities.
