After almost 20 years of negotiations, a free trade agreement will be signed between Europe and India, as agreed by EU Commission President Ursula von der Leyen and Indian Prime Minister Narendra Modi in New Delhi yesterday.
According to the EU, the German automotive industry could benefit particularly from the agreement, as India has previously imposed tariffs of up to 110% on vehicle imports from the EU. These tariffs are now to be gradually reduced to 10% for at least 250,000 vehicles per year, while they will be completely abolished for car parts after five to ten years. India will set a limit of 200,000 combustion-engine cars per year and also seek to apply the lower tariff only to vehicles priced above $17,739. The tariff is slated to be lowered further in the years ahead, benefiting European carmakers.
This is a significant takeaway for Europe, given that India is only behind the US and China in car sales. The EU would like to get a bigger slice of India’s car sales of 4.4 million per year. At present, its share is a mere 4% of that.
