India and the European Union have come to an agreement to avoid the politically sensitive auto tariff issues in the adduced FTA (Free Trade Agreement) between them. This BTIA (Broad-based Trade and Investment Agreement) is most probably going to charge the Indie-EU trade in the future. But as of now, there are assumptions everywhere in the automobile sector which is most likely to go through a major changeover because of the impact of this particular agreement.
Right now an import duty of 60 per cent is levied in the cars imported from Europe and other foreign countries. In the adduced BTIA, the European Union has been keen on getting the import duties cut down to 30 per cent for cars from the European car manufacturers. However, the major issue here is, the indigenous car manufacturing firms won’t be able to compete with the auto giants of Europe if the import duties are lessened or even if a level play ground is provided to them. Since the industry is in its burgeoning phases of growth, it gets protected by the high import duty on the foreign cars.
If the import duty will be cut, it will also go absolutely against the IAMP-2016 (Indian Automotive Mission Plan 2016). This plan targets to support the auto sector in expanding as to make it able to produce revenues of nearly $145 billion every year. This volume is very close to 10 per cent of Indian GDP. Such a progress in the automobile sector of India is most likely to generate jobs where nearly 25 million people could be employed. European Union Trade commissioner Karel De Gucht has been reasoned on these grounds by Anand Sharma, the Indian Commerce Minister.
With the IAMP-2016 and the strong oppose by the automobile manufacturers of India, India is certainly not at all in an environment to cut the import duties on cars from foreign or European car manufacturers. Since similar type of concession has to be given to the Japanese and Korean car manufacturers.