Collaboration is the way forward or so it is believed and the proposed India-EU free trade agreement will not only benefit both the countries but also auto enthusiasts like us. Expected to be signed by April, the FTA will see the removal of import duties on automotive products, resulting in price reduction of CBUs (completely built units) by upto 38%. All CBU imports attract 60% duties which turns out to be in excess of 100% with the addition of VAT and other taxes. This results in doubling of the price of a car imported from Europe. The FTA will also see the abolishment of 10% import duty on components from Europe, reducing the prices of CKD to the tune of 9%.
Prices of cars of which components are imported and assembled here will also go down, as the 10% import duty on components will be scrapped. But the fall in prices will work out to 9% only. However with the Japanese industry crying foul over the reduction in duties, it is unlikely that you will be able to buy a Volkswagen Beetle for Rs. 13 lakhs anytime soon. A European Commission report has revealed that the free trade pact would cost 4% of India’s automobile production worth $1.3 billion (Rs 6,000 crore) to move to Europe. But seeing the big picture, India would benefit from small car exports to Europe.
Source – HindustanTimes