Auto Industry Flags Risk Of Chinese EVs Entering India Via EU Route Under FTA

New Delhi, Jan 9 (KNN) While India and the European Union move into the final rounds of negotiations for a proposed free trade agreement (FTA), domestic automobile manufacturers have raised concerns over the possibility of Chinese electric vehicle (EV) makers using the EU as an indirect route to enter the Indian market at lower import duties.

Industry Flags Risk of Chinese EVs via EU Route

Indian auto companies have urged the government to structure the FTA in a manner that prevents large-scale entry of low-cost EVs assembled in Europe using Chinese components, reported the Times Of India.

The concern is that Chinese manufacturers could set up assembly units in EU member states and export vehicles to India by availing preferential tariff benefits under the trade pact.

Auto industry representatives have suggested that if EV imports are allowed under the agreement, they should be restricted to high-end models, subject to a high price threshold and capped volumes. 

They have also pressed for strict local value addition norms, proposing a minimum of 50 percent domestic or regional content to qualify for concessional duties.

Learning from UK Trade Agreement

In the recently concluded trade agreement with the United Kingdom, India had protected the domestic EV sector by limiting market access. 

However, industry executives acknowledge that trade negotiations involve compromises and that similar safeguards may be harder to secure in the EU deal, given the bloc’s size and manufacturing depth.

EV Investments and Domestic Ecosystem at Stake

Industry executives stressed that Indian companies are investing heavily in EV technology and moving up the value chain. They cautioned that premature exposure to intense foreign competition could weaken the emerging domestic ecosystem for green vehicles. 

Some Chinese EV firms, which have been unable to enter India due to tighter foreign direct investment norms, are currently relying on imports to access the Indian market.

Global Automakers Eye Indian Market

Several global automakers, including Tesla, Mercedes-Benz and BMW, are expected to use their European manufacturing facilities to export EVs to India. While Tesla currently imports vehicles from China, a reduction in tariffs could shift supplies to its German plant.

The Centre’s earlier scheme allowing lower-duty imports of electric cars for a limited period in exchange for investment commitments within three years has so far seen no takers. 

Industry sources indicate that several automakers are waiting for clarity on ongoing trade negotiations before finalising their India strategies.

(KNN Bureau)