Commerce and Industry Minister Piyush Goyal announced on Monday that due to tariff concessions on imported vehicles under India's trade agreements with the European Union (EU) and the United Kingdom (UK), global automakers will be able to assess demand and will be motivated towards local production.
According to Goyal, quota-regulated imports will help manufacturers understand the market potential for expensive vehicles in India. He noted that without market opening, its potential cannot be known, which is why a quota was set for both the EU and the UK, allowing vehicles to be imported within this limit.
The agreement between India and the UK and the EU provides for a phased reduction of tariffs on automobiles within a limited annual quota. The Comprehensive Economic Partnership Agreement (CEPA) between India and the UK came into force in July, and New Delhi has announced the acceptance of applications from automotive companies to receive tariff quotas.
The trade agreement between India and the EU is expected to be signed by December and come into effect in the first half of next year. Goyal emphasized that the gradual opening of the domestic market within these deals will help India become a global hub for automotive manufacturing.
He added that due to complex European regulations, competition for European manufacturers in India will become impossible, leading all European producers to relocate to India. Imports of vehicles from the UK and EU exceeding the established quota will continue to be subject to existing tariffs.
Besides automobiles, Goyal believes that the import of other goods will also encourage manufacturers to open businesses in India. For example, increased imports of electronic goods will interest people in setting up semiconductor factories, while the growth in household appliance imports will attract manufacturers of washing machines, dishwashers, televisions, and air conditioners.
These agreements will also open new markets for Indian exporters, and the minister advised the industry to focus on quality and utilize the emerging opportunities.
During his visit to India, UK Secretary of State for Business and Trade Jonathan Reynolds urged the industry to leverage the benefits of CEPA and achieve 'tangible results'. Reynolds expressed hope for further strengthening of trade, investment, and innovation between the UK and India. Both representatives confirmed the goal of doubling bilateral trade between India and the UK by 2030.