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The tariff concessions offered by India on cars under its free trade agreements (FTAs) with the European Union (EU) and the United Kingdom (UK) will encourage global carmakers to manufacture in India, as the quota-led imports will help manufacturers gauge the demand for high-end vehicles in India, Commerce and Industry Minister Piyush Goyal said on Monday.
“Unless you open your doors, how will people know what is the market potential in India? So you calibrate your opening, so we gave a quota—both to the European Union and the UK—within this quota you can bring your cars and largely therefore, expensive cars,” Goyal said at Dilli Dialogue, organised by the Indian School of Public Policy and Chintan Research Foundation here.
India’s FTAs with the UK and the EU offer phased tariff concessions on cars under limited annual quotas. India’s Comprehensive Economic and Trade Agreement (CETA) with the UK came into force in July, and New Delhi has already invited a round of applications for tariff-rate quotas (TRQs) from automobile companies.
India and the EU are set to sign the trade agreement by December, and it is expected to take effect in the first half of 2027.
The calibrated opening of the domestic market under the trade deals will help India become a global manufacturing hub for cars, according to the Indian commerce minister.
“India is going to become the global hub for car manufacturing,” Goyal said. “With Europe having such crazy regulations, it’s going to be impossible to be competitive. All the European manufacturers are going to come to India.”
Car imports into India from the UK and the EU beyond the quotas will continue to attract the applicable tariffs.
Besides cars, imports of other products are also expected to encourage manufacturers to set up shop in India, Goyal said.
“If more electronics are imported, more people will be interested in setting up semiconductor factories here,” the minister said. “If more white goods are imported, you will find people coming to India to manufacture washing machine, dishwashers, televisions, and air conditioners.”
The FTAs will also open new markets for Indian exporters, and as new markets open, Goyal recommended that the industry focus on quality and make the most of the emerging opportunities.
The UK’s Secretary of State for Business and Trade, Jonathan Reynolds, who is on a five-day visit to India concluding on Friday, also asked industries to utilise the access under CETA and deliver “tangible outcomes”.
“I look forward to keeping businesses at the centre of delivery and taking UK-India trade, investment and innovation from strength to strength,” Reynolds said at the India-UK Joint Economic and Trade Committee (JETCO) Business Plenary in New Delhi.
Both Goyal and Reynolds reiterated their target to double India-UK bilateral trade by 2030.
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