The European Union (EU) is pushing for the elimination of car import tariffs from India under a pending trade deal, and the Indian government is willing to seal the talks, reported Reuters.
India is considering a phased reduction of tariffs on car imports to 10% from current levels above 100%, according to two industry sources and a government official.
Despite the domestic automotive industry's lobbying efforts to maintain a minimum 30% tariff, even if reductions commence.
Additionally, the industry wants to keep import duties on electric vehicles (EVs) unchanged for another four years to support local manufacturers, the government seems inclined to offer concessions.
Reducing tariffs could benefit European manufacturers like Volkswagen, Mercedes-Benz, and BMW, and aid Tesla's entry into the Indian market with imported EVs.
"EU has come back asking for a better deal and India wants to make a better offer," said one of the industry sources.
Last week, India's commerce ministry discussed the EU's demands and the country’s position with representatives from the heavy industries ministry and the auto sector.
The European Commission has not commented on the specifics but provided an overview of its latest discussions with India in March.
European Commission spokesperson for trade Olof Gill was quoted by Reuters as saying: "For many of the key areas, the EU and India have different approaches, objectives ... This translates, in some cases, in different levels of ambition.”
India's protected car market, has local manufacturers like Tata Motors and Mahindra & Mahindra advocating against tariff reductions on EVs, citing significant investments in the sector.
The auto industry has suggested reducing tariffs on a limited number of petrol cars immediately to 70% and then gradually to 30%.
For EVs, they propose no tariff cuts until 2029, followed by a phased reduction to 30% on limited imports.
While it's unclear if India has extended the 10% tariff offer to the EU, analysts anticipate flexibility in negotiations due to global trade tensions and the potential economic impact of increased tariffs.
India and the EU aim to conclude their trade deal by year-end, with European Council President António Costa recently urging decisive progress in talks with India.
"If the EU is now feeling pressure to strike a deal with India we need to see how we can capitalise on that. It's all about leverage," said the first industry source.
Also, amid this tariffs, Jaguar Land Rover has suspended a one-month shipments to the US to evaluate the implications of newly imposed tariffs by US President Donald Trump.
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