Negotiations for a free trade agreement between the EU (European Union) and India India have now reached an important stage. According to sources, India is planning to reduce the duty on cars imported from the European Union to 40 percent from 110 percent. It is considered the biggest undertaking yet, as the two sides wrap up negotiations on a free trade agreement, which could be completed by Tuesday.

The government has agreed to immediately reduce taxes on selected vehicles from 27 European Union countries under the plan, two sources told Reuters. However, this reduction applies to vehicles with an import value of more than 15 thousand Euros (approx. Rs. 16 lakh 26 thousand 420l). This decision by the government will give European car manufacturers a better chance to enter India.

A big relief for these companies

According to sources, these 40% rates are not permanent; It is planned to gradually reduce it to 10% over time. This means that the government wants to gradually open India’s doors to European companies in the future.
This move by the Indian government will make it easier for European automobile companies like Volkswagen, Mercedes-Benz and BMW to enter the Indian market.

Till now the high cost of these cars was a headache for the companies, but now the decision of the government can bring a big relief. But the sources declined to be identified, saying the talks were confidential and could change at the last minute.

EVs will get exemption from import duty reduction

To protect the investment made by local companies such as Mahindra & Mahindra and Tata Motors in this new sector, battery electric vehicles will be exempted from import duty reduction for the first five years, sources said. After five years, the same duty reduction will be applicable on EVs as well.