India-EU draft FTA proposes phased tariff quotas for Indian cars up to 4 lakh units

The European Union will provide India with concessional access for passenger vehicles under the proposed India-EU free trade agreement, according to the draft text released by the bloc. The arrangement will initially allow 2.5 lakh Indian-made cars to enter the EU market each year at an 8% duty.The concession applies to Indian-origin internal combustion engine (ICE) and hybrid electric vehicles (HEVs) priced up to Euro 50,000 on a CIF basis.India Secures 1.64 Million Tonnes Annual Steel Export Quota Under EU Trade Pact With FTA Benefits Passenger vehicle quota to expandThe concessional tariff will be reduced gradually after the agreement takes effect. The duty will fall to 6% in the second year, 4% in the third, 2% in the fourth and reach zero in the fifth year.The annual quota will also increase progressively, reaching 4 lakh vehicles from the 10th year. Vehicles imported beyond the quota will attract the most favoured nation duty. Cars priced above Euro 50,000 will not receive a quota-based concession, although their duty will decline from 8% initially to zero by the 10th year.The draft also provides separate tariff-rate quotas for battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs) and other technologies. For vehicles priced up to Euro 40,000, the quota will begin in the fifth year at 27,500 units with an 8% duty. It will rise to 1.25 lakh units from the 14th year, with the duty eliminated from the ninth year. Concessions extend beyond automobilesFor vehicles priced above Euro 40,000 and up to Euro 60,000, the quota will start at 16,250 units in the fifth year and eventually rise to 75,000. For vehicles above Euro 60,000, the quota will begin at 6,250 units and increase to 25,000 from the 14th year.The agreement also proposes quota-based concessions for select Indian agricultural and processed food products, including table grapes, dried onions, cucumbers, gherkins, molasses-based rum and ghee.For ghee, the draft specifies an in-quota tariff at 50% of the base customs duty for an annual quantity of 1,000 metric tonnes.

The quota-based concessional duty (or tariff rate quota - TRQ) will be gradually reduced to 6 per cent in the second year of implementation of the India-EU free trade agreement, the conclusion of which was announced on January 27 this year.