# India’s carmakers back zero duty on limited British imports under trade deal – sources Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-05-15 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Indian Car Makers Consider Zero Import Duty for Limited Meta Description: Exclusive: Indian carmakers offer to reduce import tax on British cars, improving access to the Indian market. Details on phased reduction and proposals. URL: https://financedigest.com/indias-carmakers-back-zero-duty-on-limited-british-imports-under-trade-deal-sourceshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-05-15t093909z2lynxmpej4e0acrtroptp4india-britain-trade-autos-1736814015498-compressed.jpg) # India’s carmakers back zero duty on limited British imports under trade deal – sources By Aditi Shah and Shivangi Acharya NEW DELHI (Reuters) – Indian carmakers have agreed to eliminate import tax on a limited number of vehicles in a trade deal with Britain “if the need arises”, according to a document seen by Reuters, offering better access to the world’s third-largest automobile market. India currently levies 70% and 100% tax on car imports which will be reduced in a phased manner to 10% by year five but only for a maximum of 46,200 vehicles, according to a proposal made by the country’s leading auto lobby group to the government. As a [fall back](https://www.financedigest.com/euro-slips-back-below-parity-norwegian-krone-falls-on-planned-cbank-fx-purchases.html "Euro slips back below parity, Norwegian krone falls on planned cbank FX purchases"), 0% would also be acceptable, if the need arises during the negotiations,” the Society of Indian Automobile Manufacturers (SIAM) said in a submission to the commerce ministry which was seen by Reuters. Outside of this limited quota, SIAM has proposed reducing the [import tax](https://www.financedigest.com/rd-tax-important-exemptions-and-upcoming-changes-for-the-it-software-industry.html "R&D Tax: Important Exemptions and Upcoming Changes for the IT & Software Industry") on cars to 30% over a 10-year period, a move Reuters has previously reported. SIAM is now also willing to explore more cuts after the fifth [year depending on how the overall import](https://www.financedigest.com/eu-to-suspend-tariffs-on-ukraine-imports-for-one-year-kyiv-grateful.html "EU to suspend tariffs on Ukraine imports for one year, Kyiv grateful") volume from Britain grows, it said. SIAM, which groups [car makers](https://www.financedigest.com/electric-car-maker-lucid-on-track-for-2022-2023-output-targets-ceo-says.html "Electric car maker Lucid on track for 2022, 2023 output targets, CEO says") from India’s top-seller Maruti Suzuki, to majors such as Tata Motors and Mahindra & Mahindra, and the commerce ministry did not respond to a request for comment. India is one of the most protected automobile markets where import taxes are among the highest in the world of any [major car making nation](https://www.financedigest.com/ignoring-who-call-major-nations-stick-to-vaccine-booster-plans.html "Ignoring WHO call, major nations stick to vaccine booster plans"). This has drawn the ire of companies like Tesla which shelved its entry [plans last year](https://www.financedigest.com/austria-plans-to-bring-budget-deficit-within-3-of-gdp-next-year.html "Austria plans to bring budget deficit within 3% of GDP next year"). The [import tax reductions are aimed at opening up the Indian market](https://www.financedigest.com/plaque-disclosing-aids-market-important-changes-in-industry-dynamics-during-2022-2028.html "Plaque Disclosing Aids Market Important Changes in Industry Dynamics during 2022-2028"), some experts say it might not do much as the number of vehicles proposed under the scheme is small. India sold a record 4 million cars in the country last [fiscal year](https://www.financedigest.com/impact-com-fiscal-year-h1-2021-1-5b-valuation-150m-in-funding-bigcommerce-integration-69-customer-growth.html "impact.com Fiscal Year H1 2021: .5B Valuation, 0M in Funding, BigCommerce Integration, 69% Customer Growth") ending March 31, 2023. SIAM’s proposal for zero duties is limited to 26,400 cars in the first year, increasing to a maximum of 46,200 over a decade. The number of units that will benefit from this quota should also be seen in the context of the Indian [market size,”](https://www.financedigest.com/histology-cytology-market-size-to-gain-traction-of-us-28-7-billion-growth-opportunities-by-2030.html "Histology & Cytology Market Size to Gain Traction of US$ 28.7 Billion, Growth Opportunities by 2030") said an industry source aware of the proposal, which applies only to combustion engine cars with electric, hybrid, hydrogen and fuel cell vehicles excluded. [Britain has only a handful of car](https://www.financedigest.com/britains-car-output-drops-6-as-supply-woes-persist.html "Britain’s car output drops 6% as supply woes persist") factories run by the likes of Nissan, BMW and Tata’s Jaguar Land Rover. SIAM’s proposal on zero duties, however, is more geared [towards cars](https://www.financedigest.com/rising-concerns-towards-safety-of-child-are-expected-to-drive-demand-for-baby-car-seat-market.html "Rising Concerns Towards Safety Of Child Are Expected To Drive Demand For Baby Car Seat Market") with smaller engines which could provide greater benefit to companies like Nissan. This is the first time [Indian car makers have agreed to such cuts](https://www.financedigest.com/exclusive-indian-car-makers-propose-tax-cut-on-imports-in-trade-deal-with-britain.html "Exclusive-Indian car makers propose tax cut on imports in trade deal with Britain"), caving to pressure from a government that wants them to give up their protectionist position. The [companies have previously argued that such a move would dry up investment](https://www.financedigest.com/invest-in-cryptocurrencies-commodities-or-companies.html "Invest in cryptocurrencies, commodities or companies?") in domestic manufacturing by making imports cheaper and easier for global automakers. They also fear this could set a precedent in [negotiating deals](https://www.financedigest.com/s-africa-negotiates-deal-with-eu-to-clear-citrus-blockage-at-ports.html "S.Africa negotiates deal with EU to clear citrus blockage at ports") with others like the European Union (EU), Japan or South Korea, sources have previously said. India and Britain started negotiations in January last [year](https://www.financedigest.com/uaes-adnoc-to-open-swiss-trading-office-next-year.html "UAE’s ADNOC to open Swiss trading office next year") for a trade pact that could double trade to $100 billion by 2030. The two countries previously missed an [October](https://www.financedigest.com/citi-halted-financing-for-trafiguras-nickel-deals-in-october-bloomberg.html "Citi halted financing for Trafigura’s nickel deals in October – Bloomberg") 2022 deadline to conclude the deal and continue talking through the proposed deal. (This story has been corrected to show that [India currently levies 70% and not 60% tax](https://www.financedigest.com/avalara-announces-trustfile-gst-to-support-indias-implementation-of-a-national-gst-tax-regime.html "Avalara Announces TrustFile GST to Support India’s Implementation of a National GST Tax Regime"), in paragraph 2) (Reporting by Aditi Shah and Shivangi Acharya, Editing by Angus MacSwan) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---