UK’s Demand for Slashing EV Imports Is Considered in The FTA Talks
The Free Trade Agreement (FTA) between India and the UK has been a matter of ongoing negotiation for an extended period. The FTA saw significant progress last month, with some vital issues being addressed, leading to the possibility of a visit by the UK Prime Minister, Rishi Sunak. However, several outstanding matters still require attention, and the Indian government is committed to resolving them by the end of this year.
The Indian government is considering a proposal to levy a 30 percent concessional tariff on the import of around 2,500 electric vehicles from the UK every year. As per the proposed plan, the tax will apply to only those electric vehicles that cost more than $80,000. Currently, cars imported into India as fully completed units are subject to tariffs ranging from 70 percent to 100 percent, depending on their value. The move aims to promote the adoption of electric vehicles and reduce the dependence on traditional fuel-powered vehicles in the country. The government hopes this initiative will encourage more people to switch to electric vehicles and help reduce air pollution and carbon emissions.
India sold about 49,800 electric vehicles last year, accounting for 1.3% of the total 3.8 million passenger vehicles sold, says Bloomberg NEF. The data highlights the need for more aggressive measures to promote electric vehicle adoption, especially given India’s goal to reach 30% penetration by 2030. India, the world’s most populous country, is home to a burgeoning middle class prioritizing value and cost-effectiveness.
Domestic automobile manufacturer TATA Motors has already released electric vehicles (EVs) in the Indian market that cost less than $18,000. In contrast, some foreign manufacturers offer EVs with price tags exceeding $80,000 in India. In line with the country’s “Make in India” initiative, the Modi government has announced a Production-Linked Incentive (PLI) scheme of $3.1 billion in 2021 to promote domestic manufacturing of EVs.
While there have been some developments in the negotiation process, several critical issues still require attention. These include market access, non-tariff barriers, and intellectual property rights. The Indian government is determined to address these concerns and reach a mutually beneficial agreement in the near future. The FTA aims to enhance trade relations between the two nations by eliminating trade barriers and promoting investment. The FTA’s successful conclusion is likely to boost the Indian economy, increase employment opportunities, and improve business prospects for UK companies in India.
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