According to sources cited by Reuters, Indian automakers have proposed lowering the tax rate on imported cars to 30% as part of a trade agreement with Britain. This is a first and could open up access to one of the most tightly guarded auto markets in the world.
It is the first time that Indian automakers have supported such reductions, yielding to pressure from a government that wants them to give up their protectionist posture and decrease entry barriers, according to persons with direct knowledge of the situation.
The fourth-largest auto market in the world has Import
levies ranging from 60% to 100%, which are among the highest in the world and are criticised by businesses like Tesla Inc., who shelved entry ambitions due to the high tariffs.
According to three sources who spoke on the condition of anonymity, the lobbying organisation the Society of Indian Automobile Manufacturers (SIAM) has written to the government supporting gradual reductions to 30% over five years, following a grace period of five years with none.
While Britain has few car factories run by the likes of Nissan, BMW and Tata's Jaguar Land Rover, companies fear the move could set a precedent in negotiating deals with others like the European Union (EU), Japan or South Korea, the sources said.
However, the plan to cut tax rates to 30% over 10 years "is not enough", said a government source, while conceding that not reducing tax rates this time was "not an option".