The EU asked India to allow zero-duty imports of vehicles.
Although India has resisted such proposals coming form the EU, the auto industry fears that the government might give in and agree to reduce tariffs to as low as 10% or even 5% from the notified rate of 60%.
“We hope India does not give in,” said Vishnu Mathur, head of Siam, the auto industry lobby group.
So far, the Indian government has made many concessions to accommodate the EU’s interests on reducing import duty on vehicles and wines and spirits and even on medicine exports. What it got in return? The promise of zero-duty for exports of textiles. Although a lower duty on vehicles will give consumers the possibility to buy the latest models, it will also affect creating new jobs in the auto industry, but also logistics and components.
This is the main reason why India struggled to maintain the tariffs at the highest possible level; to protect these segments. But after the negotiations with the EU, India has agreed to lower import duty to 30% beginning with 2017 and 20% from 2020. Customs duty on wine will also drop to 30% from almost 150%.