India and the European Union (EU) have finalized a free trade agreement (FTA). Dubbed the “Mother of all deals”, the Indian government has consented to lower the import duty on European automobiles from the existing 110% to a mere 10%, which will considerably decrease their prices. However, there are certain conditions attached to this agreement. The tariff reductions will apply to 250,000 units annually and only to cars priced above Rs 16 lakhs aka 15,000 Euros. Electric vehicles will not receive any concessions till the next five years.
It is anticipated that high-end luxury and performance vehicles will gain the most from this arrangement. Additionally, tariffs on car components are set to be eliminated within the next 5-10 years, thereby making local assembly more cost-effective. Presently, cars valued under $40,000 incur a 70% import duty, while those exceeding $70,000 are subject to a 110% duty. This will help ailing VW group in India with sales as they heavily depended on CBU car sales to keep momentum.
