Global carmakers will be encouraged to manufacture in the country because of the tariff concessions given by India in its free-trade agreements (FTAs) with the European Union (EU) and the United Kingdom (UK), Commerce and Industry Minister Piyush Goyal said on Monday.
Quota-led imports will help manufacturers gauge the demand for high-end vehicles in India, according to him.
“Unless you open your door, how will people know the market potential in India? So you calibrate your opening, and hence we gave a quota — both to the European Union and the UK. Within this quota you can bring your cars — largely expensive cars,” Goyal said at Dilli Dialogue, organised by the Indian School of Public Policy and Chintan Research Foundation, in New Delhi.
India’s FTA with the UK and the EU offers phased tariff concessions on cars under a limited annual quota. The country’s Comprehensive Economic and Trade Agreement (Ceta) with the UK came into force in July and New Delhi has invited a round of applications for tariff-rate quotas from automobile companies.
India and the EU are set to sign the trade agreement by December and it is expected to take effect in the first half next year.
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The calibrated opening up of the domestic market under the trade deals will help India become the global manufacturing hub for cars, according to Goyal.
“With Europe having crazy regulations, it’s going to be impossible to be competitive. All the European manufacturers are going to come to India.”
Car imports into India from the UK and the EU beyond the quota will continue to have the applicable tariff.
Beside cars, imports of other products are also expected to encourage and pave the way for manufacturers to set up shop in India, Goyal said.
“If more electronic items are imported, more people will be interested in setting up semiconductor factories here,” the minister said. “If more white goods are imported, you will find people coming to India to manufacture washing machines, dishwashers, televisions, and air conditioners.”
The FTAs will open up newer markets for Indian exporters, Goyal said, recommending that industry focus on quality and make the most of the opportunities.
UK Secretary of State for Business and Trade Jonathan Reynolds, who is on a visit to India, asked industry to utilise the access under Ceta and deliver “tangible outcomes”.
“I look forward to keeping businesses at the centre of delivery and taking UK-India trade, investment and innovation from strength to strength,” Reynolds said at the India-UK Joint Economic and Trade Committee Business Plenary in New Delhi.
Both Goyal and Reynolds reiterated their target to double India-UK bilateral trade by 2030.