- Eliminating hefty tariffs would help the likes of the VW Group, Mercedes, and BMW.
- India hits imported vehicles with tariffs of as much as 110% to protect its local industry.
- In March, Donald Trump asked India to drop its tariffs, which could help Tesla.
India may soon throw open the garage door to cheaper European cars by slashing its notoriously high import tariffs, potentially transforming the country’s auto market and turning up the heat on local manufacturers. It’s not just Europe in the mix either; the US has been pressing for the same, hoping to wedge its brands into one of the world’s fastest-growing auto markets.
Read: Audi Stops All US Vehicle Exports Over Tariffs
Currently, India shields its domestic auto industry with import duties that can hit a staggering 110%. But according to unnamed sources speaking to Reuters, officials are considering dramatic cuts for European-made vehicles, potentially reducing tariffs to as low as 10%. If that happens, it would be a major boost for German heavyweights like BMW, Mercedes-Benz, and the Volkswagen Group.
Local Resistance and Industry Pushback
Unsurprisingly, local brands, including Tata Motors and Mahindra & Mahindra, don’t like the plans. These companies have been lobbying hard against the proposed reductions, wary of losing the strong market dominance they’ve cultivated under the current protectionist system.
Reuters reports that India’s car industry is open to reducing tariffs on certain petrol-powered cars from more than 100% to 70%, and then issuing further cuts in phases, eventually reducing tariffs to 30%. Different cuts have been proposed for EVs. Sources say Indian firms do not want to see tariffs lowered for EVs until 2029 before they are slowly decreased to 30%.
Trade Talks and Timing
It’s understood that the Indian commerce ministry has told representatives from the local auto industry about the European Union’s demands for tariff reductions. Interestingly, these talks may get an unintentional assist from former US President Donald Trump’s global trade policies.
Ironically, President Trump recently announced a 26% tariff on Indian exports to the United States, but in early March, asked India “to bring tariffs down to zero or negligible in most sectors, except agriculture.” If India were to significantly reduce or eliminate tariffs on cars imported from the United States, such a move could greatly benefit Tesla which is gearing up to launch its EVs in India.
