European Union will allow 2.5 lakh Made-in-India cars to enter the continent annually at a concessional import duty of 8% under a bilateral free trade agreement (FTA), with the quota rising to 4 lakh vehicles. According to the draft text released by the EU, the reduced import duty will be applicable for the Made-in-India internal combustion engine (ICE) passenger vehicles and hybrid electric vehicles, which are priced up to Euro 50,000 on a CIF (cost, insurance, freight) basis.
The draft also reveals that the quota-based concessional duty will be gradually reduced to 6% in the second year of implementation of the India-EU FTA, which was announced on January 27 this year. After the second year of implementation, the import duty will come down to 4% in the third year, 2% in the fourth year and then to zero in the fifth year.
As per the draft, the annual quota for the concession-worthy cars will increase gradually from 2.5 lakh vehicles in the first year to 4 lakh from the 10th year. Beyond this quota, the additional imported vehicles will be covered under the most favoured nation (MFN) import duty. However, there are no quota-based concessions for cars priced above Euro 50,000, which equals ₹55.38 lakh at the current exchange rate. The duty on these vehicles will come down to zero per cent in the 10th year from 8% in the first year of the pact, which is expected to be signed later this year and may come into force from next year.
For battery electric vehicles (BEV), plug-in hybrid electric vehicles (PHEV) and passenger vehicles of any other technology except ICE and HEV, the pact provides a separate TRQ. In this category of vehicles priced up to Euro 40,000 CIF, the TRQ will start from the fifth year. The EU will allow 27,500 vehicles at 8% import duty. The quota size will gradually increase to 60,500 in the ninth year and then to 125,000 from the 14th year onwards. The duty will be removed from the ninth year of the implementation of the deal. The CIF includes the actual purchase price of the vehicle, shipping/freight cost, and insurance to the EU port of entry.
{{/usCountry}}For battery electric vehicles (BEV), plug-in hybrid electric vehicles (PHEV) and passenger vehicles of any other technology except ICE and HEV, the pact provides a separate TRQ. In this category of vehicles priced up to Euro 40,000 CIF, the TRQ will start from the fifth year. The EU will allow 27,500 vehicles at 8% import duty. The quota size will gradually increase to 60,500 in the ninth year and then to 125,000 from the 14th year onwards. The duty will be removed from the ninth year of the implementation of the deal. The CIF includes the actual purchase price of the vehicle, shipping/freight cost, and insurance to the EU port of entry.
{{/usCountry}}For vehicles priced above Euro 40,000 CIF and up to Euro 60,000 CIF, the tariff rate quota will start from the fifth year with 16,250 vehicles annually at 8%. The annual quota size will be increased to 75,000 in the 14th year and onwards, and the duty will come down to nil.
Further, for these cars priced above Euro 60,000 CIF, the tariff rate quota will start from the fifth year. The EU will allow 6,250 vehicles at 8% import duty. The quota size will gradually increase to 13,250 in the ninth year and then to 25,000 from the 14th year onwards. The duty will be removed from the ninth year of the implementation of the deal.