According to two people involved with the talks, India is attempting to finalize a free-trade agreement (FTA) with the UK by the end of the year by suggesting lowering import taxes on a select number of electric vehicles from the UK, according to a Bloomberg report.
Sources, who spoke to Bloomberg, said that New Delhi is thinking of imposing a 30 per cent concessional tariff on the 2,500 electric vehicles that are imported from the UK each year that cost more than $80,000. Depending on their worth, cars imported into India as fully completed units are currently subject to tariffs ranging from 70 per cent to 100 per cent.
One of the few unresolved concerns in the free trade negotiations is the UK's desire for import concessions on electric vehicles.
UK Prime Minister Rishi Sunak and his Indian counterpart Narendra Modi had planned to clinch the agreement by the end of October 2023, however, it is unlikely that a settlement will now be revealed before December 2023.
An information request by Bloomberg was not immediately answered by India's Ministry of Commerce.
India, the most populous nation on earth, is seeing an increase in middle-class and rich consumers' demand for electric cars. The high price of EVs, a lack of options, and a shortage of charging stations have all hindered the country's adoption of EVs. In a country with the worst polluted air in the world in its capital city, opening up the EV market might help hasten the transition to cleaner modes of transportation.
Tata Motors Ltd.'s Nexon.ev, the nation's best-selling electric vehicle, costs less than Rs 15 lakh ($18,000) in the cost-conscious Indian market. In India, premium German automakers BMW AG, Mercedes-Benz Group AG, and Volkswagen AG's Audi sell electric vehicles costing more than $80,000.
As it works to establish a homegrown industry for the production of electric cars and their parts, Modi's administration is importing EVs with caution. A $3.1 billion output-linked incentive programme for domestic electric vehicle production was announced by the government in 2021.
Those with knowledge of the proceedings claim that India has not yet decided on its stance regarding import taxes on electric vehicles.
India and the UK have already loosened their stances on some matters, such as lowering taxes on British automobiles and scotch whisky.