Shares of Indian automakers fell sharply on Tuesday after reports suggested New Delhi may slash import tariffs on European cars to 40% from current levels of up to 110% under a proposed India–EU trade pact. The move could intensify competition, with Mahindra & Mahindra leading losses on the Nifty Auto index.
Indian carmakers faced heavy selling pressure following reports of aggressive tariff cuts on European imports. The proposed reduction, part of the India–EU Free Trade Agreement (FTA), marks one of the most significant liberalizations of India’s auto sector.
Key Highlights:
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Tariff Proposal: Import duties on select EU-made cars priced above €15,000 may be cut to 40%, with a roadmap to further reduce tariffs to 10% over time.
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Market Reaction: Mahindra & Mahindra: Shares fell 4%, leading declines.
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Nifty Auto Index: Dropped as much as 2%.
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European Automakers’ Advantage: Brands like Volkswagen, BMW, and Mercedes-Benz stand to gain easier access to India’s passenger vehicle market.
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Industry Concerns: Domestic manufacturers fear margin pressures and loss of market share, particularly in premium and luxury segments.
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Policy Context: The tariff cut is seen as a strategic move to boost bilateral trade and Indian exports, but it raises questions about protection for local players.
Sources: Reuters, The Hindu BusinessLine, The Economic Times, India Today, Mint