New Delhi, Jan 26 (PTI) Reduction in customs duty on imported cars under the India-EU free trade agreement could enable the growth of the luxury car segment in India, which currently remains minuscule,
BMW Group India President and CEO Hardeep Singh Brar said on Monday.
The domestic luxury car segment accounts for just 1 per cent of the overall passenger vehicle segment.
The India-EU Free Trade Agreement would be a historic milestone benefiting both sides by expanding trade and enabling deeper exchange of technology and innovation, Brar said in a statement.
“From an automotive industry perspective, we hope the FTA will include balanced, win-win provisions that help stimulate demand in the luxury segment while strengthening supply chain integration which is especially important in the current geopolitical context,” he added.
If customs duties on completely built units are reduced, it would help expand the luxury car market in India, Brar stated.
“While CBUs (completely built units) currently account for about 5 per cent of our sales, such a framework would allow us to broaden our product portfolio, introduce globally popular models and test new offerings,” he stated.
If demand scales up, it could also support deeper localisation over time, he added.
“Given that luxury vehicles form only about 1 per cent of the passenger vehicle market, this would benefit consumers without impacting mass market players, making it a genuine win-win for both India and the EU,” Brar said.
At present, imported passenger vehicles priced below USD 40,000 attract a basic customs duty of 70 per cent, and those priced above USD 40,000 are taxed at an effective customs duty of 110 per cent.
He noted that there is a strong and positive signal of confidence in India’s long-term growth story.
India today is not just a large market, but a future-ready economy backed by reforms and policies focused on building a globally competitive ecosystem, he added.
India and the EU are set to announce on January 27 the conclusion of negotiations and the finalisation of an FTA.
The pact is nearing the finishing line after 18 years of negotiations. The talks started in 2007. PTI MSS MR
