India has completely protected the best-selling cars in the Indian market in the Free Trade Agreement (FTA) with the European Union (EU). Under the FTA, only passenger cars priced above Rs 25 lakh will be given gradual relaxation in import duty. An official gave this information on Wednesday. The official said that this discount given on cars priced above Rs 25 lakh will also be within a limit. Under the agreement, only a maximum of 2.5 lakh cars imported from Europe in a period of one year will be exempted.
Quota will be given to old and famous car companies
The official said that this quota will be given mainly to old and famous car companies of the European Union. India and the European Union had announced the completion of negotiations on this agreement on Tuesday. This agreement will be signed and implemented this year. Under this agreement, India has allocated an annual quota of 1.6 lakh diesel and petrol cars and 90,000 electric cars out of a total of 2.5 lakh. India has not given any exemption in import duty on cars priced below 15,000 euros (cost, insurance, freight). After adding Custom Duty, GST and Road Tax, the retail price of the car is around Rs 25-27 lakh.
90 percent of cars sold in India are priced below Rs 25 lakh
Nearly 90 percent of the cars in India’s domestic car market are priced below Rs 25 lakh. India’s passenger car market is now the third largest in the world and more than 43 lakh cars are sold here every year. The official said India is mainly placing quotas on large engine capacity cars and expensive electric cars, while small engine capacity and medium to low priced cars are being protected. Under the agreement, the quota is divided into three price ranges for diesel and petrol cars. According to the agreement, no discount will be given on cars priced below 15,000 euros. At the same time, the import duty on cars priced between 15,000 to 35,000 euros will be 35 percent in the first year and there will be a quota of 34,000 cars annually.
Only 2.5 percent of the car market will get exemption
Apart from this, the import duty on cars priced between 35,000 to 50,000 Euro and more than 50,000 Euro will be 30 percent in the first year and there will be a quota of 33,000 cars in each category. The total concessional quota in the first year will be 1,00,000 vehicles. “We expect its share to be less than 2.5 per cent of our market. The EU will give 2.5 times more quota to Indian carmakers than the quota given by India,” the official said.
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