Shulou(Shulou.com)11/24 Report--

October 9 news, sources revealed that Indian automakers have proposed to reduce the tariff rate on cars imported from the United Kingdom to 30% to join the trade agreement between the two sides. The move could make it easier for carmakers to break into the Indian market.

This is the first time an Indian carmaker has supported a reduction in import tariffs on cars under pressure from the Indian government, according to people familiar with the matter. The Indian government wants local carmakers to take the initiative to lower barriers to market entry.

As the world's fourth-largest car market, the import tax on Indian cars is as high as 60 to 100 per cent, making it one of the highest in the world, leading carmakers such as Tesla to shelve their plans to enter the local market, drawing frequent criticism from major car manufacturers.

The Association of Indian Automobile Manufacturers (SIAM) has written to the government supporting a gradual reduction in car import duties to 30 per cent over five years after a five-year grace period, according to three sources who spoke on condition of anonymity.

At present, the trade talks between India and Britain are coming to an end, and the final agreement is expected to be signed by the end of this month.

Members of the SIAM group include Maruti Suzuki (Maruti Suzuki), which is the best seller in the Indian car market, as well as large companies such as Tata Motors and Mahindra & Mahindra.

For years, Indian carmakers have resisted tax cuts to protect their market share. They argue that tax cuts will make global carmakers' cars cheaper and easier to capture local markets, thereby reducing investment in Indian manufacturing.

At present, there are only a few car factories operated by world-renowned automakers such as Nissan, BMW and Jaguar Land Rover, according to sources. But Indian carmakers remain concerned that tax cuts could set a precedent for negotiations with other companies in places such as the European Union, Japan or South Korea.

The move comes weeks after Piyush Goyal, India's commerce minister, firmly told executives at companies such as Suzuki, Tata Motors and Mahindra that they had to make concessions or the government would force them to do so.

"Mr Goyal's message is clear-if companies do not propose tax cuts on their own initiative, the government will cut taxes for them," said one person who attended a meeting with executives at the time.

Maruti, Tata and Mahindra did not immediately respond to requests for comment.

However, a source said the plan to reduce the tax rate to 30 per cent within 10 years was "not enough", while admitting that this time there was "no option" not to lower the tax rate.

"one view is that luxury cars are easier to enter the Indian market than other models," a source said. there is no problem with opening up this area ahead of time and lowering interest rates. "

India's move is to boost global trade. India has already held several rounds of trade negotiations with the European Union, but imposing high tariffs on imported cars is one of the reasons for the failure of the talks.

India has resumed negotiations with the European Union and hopes to finalize the agreement by the end of 2023. The EU region is home to companies such as Volkswagen and Mercedes-Benz, which see India as a major growth market.

Some local Indian companies are also concerned that easier imports of electric cars could hurt local companies as large amounts of investment flow to clean transport, the sources added.

"there are a lot of concerns about the possible impact of tax cuts, but there is little data on how much impact it will have," said one of the sources. "

For now, lower car import tariffs will only affect car factories operating in the UK, including Nissan, BMW and Jaguar Land Rover. Tesla, an American electric carmaker, will not be able to enjoy the benefits of lower import tariffs.

Tesla has wanted to enter the Indian market for years, but the company first wants to test the level of demand for its electric cars by importing products. Elon Musk, chief executive, said Tesla would promise to build a super factory in India if strong sales figures justified the establishment of a factory in India on the premise of lower import tariffs. However, India is reluctant to cut tariffs first unless Tesla explicitly promises to build a factory first.

It is a huge risk for Tesla to build a factory first. after all, Tesla's electric car may not sell well in the Indian market. If there is not enough market demand, the company is spending billions of dollars to build a factory in a market where there is not enough consumers to buy cars.

This is a blow to Tesla's business development plan. The company has specially hired a team for the Indian market, equipped with local experts to study the Indian market strategy.

It was also reported that Tesla had at one point considered the UK as the site for a new super factory.

In 2020, there were rumors that Tesla might be interested in buying 650 acres (263 hectares) of land in Somerset, south-west England. A spokesman for the UK's Department of International Trade said it was "working closely with partners to find new investment sites across the UK for the development and manufacture of electric vehicles." KwasiKwarteng, the UK business secretary, later said Mr Somerset had "manufacturing skills and capabilities to support a good super factory".

But in the end, everything disappeared. Tesla is more likely to build the next super factory in Canada.

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