[Source/Observer Network Zhang Jiadong, Editor Gao Shen]

According to a report by Reuters on April 7 local time, the EU hopes to force India to cancel import car tariffs through an undetermined trade agreement.

According to sources, despite the fact that some industry insiders suggested that India's import tariff should at least be retained at 30% and not adjust the import tax for electric vehicles within the next four years to protect domestic enterprises, India still expressed its willingness to gradually reduce the import car tariff from more than 100% to 10%.

Renault Nissan automobile factory in southern India, Reuters

This attitude of the Indian government stems from last month when the US government sought to cancel import tariffs including electric vehicles during bilateral trade negotiations with India, which brought huge pressure to Indian auto manufacturers.

After Trump pressured India, the EU also made similar demands.

Reuters said that if India reduces tariffs, it will be a victory for European automakers such as Volkswagen, Mercedes-Benz, and BMW because it further expands their access to the Indian market. At the same time, since Tesla will start selling imported electric vehicles produced in Berlin factories in India this year, Musk will also benefit.

As a single market with annual sales of 4 million vehicles, India has long been considered one of the most protectionist markets in the world due to high import tariffs.

However, after Prime Minister Narendra Modi came to power, he hoped to seize the opportunity of electrification transformation to push the Indian automotive market to the next level. However, the lack of excellent domestic supply chains and technical support has led to slow growth in the Indian car market in recent years.

Previously, foreign auto manufacturers such as Toyota and Nissan, which have a large number of imported cars in India, have repeatedly claimed that India's trade protection policies are too strict and suggested reducing the tariff for limited quantities of gasoline vehicles from more than 100% to 70%, then gradually reduce the tariff to 30%, and hope not to reduce the tariff before 2029, then gradually reduce the limited quantity of import tariffs to 30%.

On the other hand, Indian domestic auto companies such as Tata and Mahindra oppose reducing car import tariffs, especially for electric vehicles. These companies stated that significantly reducing tariffs would make imported cars cheaper and reduce investment in local manufacturing, while also harming their electrified industries into which they have already invested heavily and plan to invest more funds.

An analyst said that although it is currently unknown whether India has proposed a 10% import tariff proposal to the EU, given the threat of global trade wars and the economic recession caused by the US government's tariff hikes, India's negotiations with the EU may be more flexible than before.

Currently, India and the EU have been negotiating trade policies for years, and both sides agreed in February to reach an agreement by the end of the year to mitigate the impact of tariffs.

European Council President António Costa recently said on social media that now is the time to "firmly advance negotiations with India." Industry insiders also said, "If India shows pressure on tariffs and agreements, the EU should see how to take advantage of this."

This article is an exclusive article of Observer Network and cannot be reprinted without authorization.

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