India Barely Imports Cars To Protect Its Own Industry
As sweeping tariff changes spearheaded by the U.S. administration upend the world’s economy, Reuters reports that another trade relationship is evolving: The European Union is looking for India to cut tariffs on its car imports. India’s currently highly protectionist stance is designed to support its domestic automakers market. In the financial year of 2023 to 2024, cars accounted for only 0.1 percent of India’s imports, with trade data from the Department of Commerce showing that around $700 million worth of cars were imported to the country that year.
According to the World Population Review, India has one of the highest import tariffs on cars in the world, at around 106 percent. This could soon change though, with New Delhi now reportedly open to a gradual lowering of its tariffs to 10 percent. This prospect has been met with criticism from Indian carmakers, who want the country to retain at least a 30 percent tariff on car imports, as well as higher import duties on EVs until 2029, as per Reuters.
As data from India’s Department of Commerce shows, Germany and the UK are India’s biggest sources for car imports, accounting together for 56 percent of Indian car imports in 2023/2024. The U.S. was the fourth biggest source country for Indian car imports in 2023/2024, worth $52.4 million. U.S. President Donald Trump’s administration had also earlier sought a similar deal.
The UK and China saw growth at over 100 percent, respectively, between the financial year 2022/2023 and 2023/2024. If the reported tariff cuts do materialize, they could benefit European carmakers such as Volkswagen, Mercedes-Benz and BMW.