Think how it is when you buy a luxury car like Mercedes-Benz or BMW at the price of a big SUV. This can be possible very soon if the plan to cut tax between the European Union (EU) and the Government of India is approved. Such a condition can be laid under the trade agreement between the European Union and India. India can also complete the deal by offering better on its behalf.
According to a report by Reuters, the European Union has demanded under the trade agreement with India that tariffs should be reduced on cars made in Europe. Sources say that Prime Minister Narendra Modi's government can finalize the deal soon by making India's offer better in this regard. Currently, the import of cars in the country is taxed up to 100 percent. A few days ago, US President Donald Trump has also placed a similar demand for tariff cuts in front of India.
According to Reuters, India can adopt the stand to reduce the import tariff from 100 percent to 10 percent on European cars. However, India's domestic car companies say that the government should keep this tariff at least 30 percent. At the same time, the rate of tariff on electric vehicle should not be brought under its scope for 4 years, so that they can get proper returns on their investment. US President Donald Trump has criticized India for putting high tariffs on India's cars on several occasions.
If the Government of India reduces the tariff in view of the trade deal with the European Union, then it will directly benefit Volkswagen, Mercedes-Benz and BMW. These companies will be able to bring their complete built unit (CBU) car in India and will have to pay less tax on them.
Soon Volkswagen is also going to bring its Tiguan R-Line from the CBU route in India. In such a situation, it will be easy for India to bring and sell more units of this car cheaply in India. At the same time, Tesla also wants to do business in India by importing a car in India from its Berlin factory. In such a situation, he can also get the benefit of this deal.
Recently, Tesla has made an entry plan in India. Just before this, the Government of India has issued a new EV policy, which has a provision to reduce the import duty on electric cars to 15 percent. It was earlier from 70 to 110 percent. With this tax cut, India's condition is that every year 8,000 cars will get the benefit of low import duty. At the same time, companies will have to install their factory or assembly line in India by investing $ 500 million within 3 years.
In such a situation, the question is whether the Government of India can give more preference to the European Union and can make the tax rate 10 percent instead of 15. Or can leave domestic companies in the open market to compete with Tesla as well as prepared electric vehicles in Europe. That too at a time when the market of electric vehicle inside the country is in childhood.
Auto expert and founder of Indea Design School, Avik Chattopadhyay, says that the government can offer a similar tax rate to both America or Europe, as it will not risk to offend any country. At the same time, one can take any measures to save domestic companies.
Avik Chattopadhyay says that all these things are based on possibility right now. However, by reducing the import duty of the government, the price of European cars will definitely be low in the country.
