EU wants zero tariffs on car imports from India: Report

The European Union wants India to eliminate tariffs on car imports, weeks after US President Donald Trump's administration sought a similar elimination of import duties. The EU wants a tariff cut under a long-pending trade deal.

According to sources who told Reuters, the Modi government is willing to consider in order to seal the talks. Industry sources said that the government is open to the phased reduction of tariffs to 10 per cent from more than 100 per cent, despite the industry lobbying to retain a 30 per cent tariff. The industry wants the government to also not tinker with import duties on EVs for four more years to protect domestic players.

The EU has asked for a better deal and India wants to make a better offer, one of the sources said. India's commerce ministry conveyed the EU's demands and India's stance to officials from the heavy industries ministry and auto industry representatives in a meeting last week, the sources said.

The proposed tariff cuts are expected to benefit European carmakers like Volkswagen, Mercedes-Benz, and BMW by expanding their market access in India. Additionally, Tesla, owned by Elon Musk, could benefit as it plans to begin sales of imported EVs in India, possibly from its Berlin plant this year.

According to Olof Gill, the commission's spokesperson for trade, the EU and India have different approaches and objectives in key areas, leading to varying levels of ambition.

India's car market, producing 4 million units annually, is among the most protected globally. Domestic carmakers argue that reducing tariffs sharply would undermine local manufacturing investments by making imports more affordable.

Companies like Tata Motors and Mahindra & Mahindra have actively opposed lowering import tariffs on EVs, citing potential harm to a sector in which they have made significant investments and plan further financial commitments. 

India's auto industry has proposed a phased tariff reduction on a limited number of petrol cars, starting at 70 per cent from over 100 per cent, and eventually decreasing to 30 per cent. For EVs, they oppose tariff cuts until 2029, followed by a phased reduction on limited imports to 30 per cent.