Hyundai India is concerned at the possible effects on its exports to the continent if a free trade agreement (FTA) between the European Union and South Korea goes ahead.
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Indian-made i10 and i20 small hatchbacks are sold here in the UK and across Europe and have been particularly successful lately due to various government incentive schemes encouraging buyers to choose fuel efficient models. Hyundai UK recently reported difficulty getting enough of its strong selling versions from India.
According to Economic Times and Reuters reports, the proposed trade pact would allow the parent automakers to ship cars to Europe from Korea without paying the 10% duty currently levied on imports, eroding the competitive advantage enjoyed by Indian carmakers whose products attract 6.5% duty. They are also built with cheaper labour in less mechanised and therefore less costly factories.
Hyundai Motors India exports half the cars it makes in India and is the largest exporter of cars from the country.
The company has asked the Indian government to help protect its interests, the reports said.
“The government needs to act fast to take some decisions on car exports. A 6.5% import duty that Indian carmakers face in Europe will make it virtually impossible to compete with Korea,” the Economic Times of India quoted Hyundai India’s managing director and chief executive, HS Lheem, as saying.
Kia Motors also sells its two hatchback equivalents of parent Hyundai’s i10 and i20 in Europe but these already come from Korea.
