India proposes lowering EV import tariffs in UK FTA
What's the story
India is considering lowering import taxes on select electric vehicles (EVs) from the UK as part of ongoing free trade negotiations between the two countries, Bloomberg reported.
The proposal entails a 30% concessional tariff on 2,500 EVs imported annually from the UK, priced above $80,000 (around Rs. 67 lakh).
Presently, India imposes taxes ranging from 70% to 100% on cars imported as completely built units, based on their value.
Details
Outstanding issues in free trade talks
One of the last remaining issues in the free trade discussions is the UK's request for import concessions on EVs.
UK Prime Minister Rishi Sunak and Prime Minister Narendra Modi had aimed to finalize the agreement by the end of last month.
However, Bloomberg reports that an announcement is now unlikely until December.
What Next?
India's growing EV market
India, home to the world's largest population, has seen a growing demand for EVs among middle-class and affluent consumers.
Yet, high costs, limited choices, and insufficient charging stations have impeded EV adoption. Expanding the EV market could hasten the transition to cleaner transportation in a country with the world's most polluted air.
In 2021, India unveiled a $3.1 billion production-linked incentive program for local EV production to bolster domestic manufacturing.
Insights
Bestselling electric cars in India
In India's price-sensitive market, Tata Nexon.ev is the top-selling electric car, priced at under Rs. 15 lakh.
German luxury automakers BMW, Mercedes-Benz, and Volkswagen AG's Audi offer electric cars above Rs. 65 lakh in India.
Sources familiar with the talks say a final decision on India's stance regarding import duties on EVs has not yet been reached.
Facts
Expected benefits of the free trade deal
India and the UK anticipate that the free trade agreement will double bilateral trade by 2030 through reduced tariffs and greater market access.
The deal would also represent a political victory for both leaders, as the UK-India pact is viewed as a key prize of Brexit and a means to enhance India's manufacturing aspirations.
India currently levies various import duties on cars, with taxes ranging from 15% to 35% for vehicles bought from overseas unassembled.