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Indian Automakers Push for Tax Cut in UK Trade Agreement

Indian car makers have proposed cutting the tax rate on imported cars to 30% as part of a trade deal with Britain, sources told Reuters. This move could potentially ease access to one of the world’s most protected automobile markets, marking a significant shift in the industry’s stance on tax cuts.

The current import taxes in India range from 60% to 100%, making it one of the highest globally. Companies like Tesla Inc have criticized these high tariffs, with Tesla even shelving its entry plans into the Indian market due to these taxes. The Society of Indian Automobile Manufacturers (SIAM) has recommended phased cuts to 30% over five years, following a grace period of five years with no taxes.

This proposal comes at a crucial time as trade talks between India and Britain are set to conclude soon, with the final deal expected to be signed by the end of the month. The decision to lower tax rates is a departure from the industry’s previous stance, where car makers resisted tax cuts to protect their turf and domestic manufacturing.

Industry experts believe that this move could set a precedent for negotiating deals with other regions like the European Union, Japan, or South Korea. Commerce minister Piyush Goyal has emphasized the need for India to make an offer to Britain on autos, prompting companies to reconsider their position on tax cuts.

While some believe that a 30% tax rate over 10 years is not sufficient, it is clear that not reducing tax rates is not an option. The industry is open to easing access for luxury cars sooner than other categories and lowering rates earlier to attract global investment in the Indian market.

India’s push to lower tax rates on imported cars is part of a broader strategy to boost trade ties globally and attract investment from companies looking to diversify beyond China. However, there are concerns that easy import of electric vehicles could potentially hurt local players as the industry transitions towards clean mobility.

As negotiations with other regions like the European Union resume, the industry will closely monitor the implications of the proposed tax cuts on both industry players and consumers. The outcome of these trade talks could have a significant impact on the future landscape of the Indian automobile market.

Lokendra Deswar

Lokendra, the visionary Editor-in-Chief at Unique News Online, brings over six years of rich experience to the table. With a strong academic background and sharp insights, he covers Finance, Politics, Viral Stories, Sports, and Technology—delivering engaging, well-rounded perspectives that both inform and captivate his audience.

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