India to grant tariff concessions to 100,000 EU ICE cars in year 1 of FTA; EVs below €20,000 excluded

India EU FTA

• India to cut tariffs on 100,000 EU ICE cars in first year of FTA
• Import duties on ICE cars to drop to 10 percent by year 5 of the agreement
• Cars over €15,000 qualify for tariff concessions under the deal.

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India will grant tariff concessions to 100,000 internal combustion engine (ICE) cars at preferential import duties in the first year of its agreement with the European Union, including 34,000 cars priced €15,000–35,000, 33,000 cars priced €35,000–50,000, and 33,000 cars priced above €50,000, commerce ministry sources said.

The quota will gradually rise to 160,000 units in the tenth year of the FTA while import duties on ICE cars will fall to 10 percent in year 5, making European models more affordable for Indian consumers.

For electric vehicles, tariff concessions under the deal will kick in only in the fifth year of the FTA. The proposed duty rates will vary by vehicle price: 35 percent for those priced €20,000–€40,000, 30 percent for €40,000–€60,000, and 30 percent for vehicles above €60,000, sources said.

While, the specific quotas for EVs during the entire period were not disclosed, the quota for the first eligible year will be capped at 20,000 units.

After five more years, the duty rate is expected to drop to 10 percent, while the quota of EVs eligible for tariff concessions will gradually rise to 90,000 units by the 14th year of the agreement.

Therefore the tariff cut on cars, across all segments, will come with a quota of 250,000 vehicles a year.

Cars priced below €15,000 have been excluded from the deal, with the threshold applying across internal combustion engine, electric and hybrid vehicles.

Only cars priced above €15,000 will be granted tariff concessions, and these have been divided into three segments, each subject to a separate import quota.

Currently, the import duty levied by India on completely built-up (CBU) passenger vehicles is 110 percent for cars costing over $40,000, and 70 percent for cars costing up to $40,000.

India and the 27-nation European Union concluded talks for a free trade agreement on January 27 granting greater market access to both sides once the deal kicks in.