India has protected its mass market car segment under the Free Trade Agreement FTA signed with the European Union. According to an official, the agreement does not affect the cars that sell the most in India. Under the FTA, import duty relief will be given only on passenger vehicle priced above Rs.25 lakh. Even his benefits will be provided in a phased manner. The official explained that the concession will also have a clear limit. As per the agreement, duty benefits will apply only to a max of 2.5 lakh cars imported from Europe in a yea. This ensures that domestic carmaker remain safeguard.
Import Quota Benefits
An official said that the import quota will mainly benefit will established and popular European union announced the conclusion of FTA negotiation on Tuesday. The agreement is expected to be signed and implemented later this year. Under the deal, India has allowed a total annual quota of 2.5 lakh vehicles, including 1.6 lakh petrol and diesel cars and 90,000 electric vehicles. However, no import duty relief will be given on cars priced below 15,000 euros CIF value. After adding customs duty, GST and road tax, such cars cost around 25-27 lakh in India.
Nearly 90 percent of cars in India are priced below Rs.25 lakh, making the domestic market highly price-sensitive. India’s passenger car market is now the third largest in the world, with annusal sales crossing the 4.3 million units. An official said that the import quota under the India-EU FTA mainly targets the large-engine vehicle and premium electric cars., while affordable and mid-range cars remain protected. Under this agreement petrl and diesel vehicels are divided into three price categories. Cars priced below 15,000 euros will not get any duty relief. Vehicles priced between 15,000 and 35,000 euros will face 35 percent import duty in the first year, with an annual quota of 34,000 cars.
Under the India-EU FTA, Cars prices between 35,000 and 50,000 euros as well as those costing above 50,000 euros, will face an import duty of 30 percent in the first year. Each price category will have an annual quota of 33,000 vehicles. This means the total concessional quota in the first year will be limited to 1,00,000 cars. An official said that the share of these imported vehicles is expected to remain below 2.5 percent of India’s overall car market. he also added that the European union will offer Indian Automobile manufacturers a quota that is 2.5 times higher than what India has provided to EU Carmakers.
