India might reduce taxes on import of EVs from UK as free-trade talks accelerate
India is aiming to clinch a free-trade deal with the UK by the end of the year by decreasing import tariffs on a limited number of UK-made, according to sources engaged in the discussions.
A 30% concessional tariff on the 2,500 electric vehicles that are imported from the UK each year and cost more than $580,000 is being considered by New Delhi. The participants, who wished to remain anonymous due to the private nature of the discussions, stated that, depending on the worth of the automobiles, India now pays taxes ranging from 70% to 100% on fully constructed cars.
One of the few unresolved concerns in the free trade negotiations is the UK's desire for import subsidies for electric vehicles. It was anticipated that Prime Minister Rishi Sunak and his Indian counterpart Narendra Modi would finish the agreement by the end of last month, but as Bloomberg News previously reported, it is doubtful that a deal would be revealed before December.
An information request was not immediately answered by the Trade Ministry of India. Since the negotiations are still in progress, a UK Trade Department representative declined to comment.
India, the most populous nation on earth, is seeing an increase in middle-class and rich consumers' demand for electric cars. The high price of EVs, a lack of alternatives, and a shortage of charging stations have all hindered the country's adoption of EVs. In a country with the worst polluted air in the world, opening up the EV market might help hasten the transition to cleaner modes of transportation.
According to Bloomberg NEF, the number of electric vehicles sold in India last year was 49,800, or barely 1.3% of the 3.8 million passenger vehicles sold.
India's best-selling electric vehicle in the nation's budget-conscious market. Nexon.ev, a product of Tata Motors Ltd., costs less than 1.5 million rupees ($18.000). In India, premium electric car manufacturers BMW AG, Mercedes-Benz Group AG, and Volkswagen AG's Audi sell vehicles costing more than $80,000.
The Modi administration is importing EVs with caution in an effort to develop a homegrown sector for the production of electric cars and their components. A $3.1 billion output-linked incentive programme for domestic electric vehicle manufacture was announced by the government in 2021.
Those with knowledge of the proceedings claim that India has not yet decided on its stance regarding import taxes on electric vehicles.
As Bloomberg News previously reported, India and the UK have already loosened their positions on a number of topics, such as lowering tariffs on British automobiles and scotch whisky.
By 2030, the two nations anticipate that the free trade agreement will have doubled bilateral commerce thanks to reduced tariffs and improved market access. Additionally, it would be a political victory for both governments, since the UK-India agreement is viewed as a major Brexit benefit and a means of advancing India's industrial goals. India levies several import taxes on automobiles. The tax for cars bought from overseas that are not yet built varies from 15% to 35%.