There might be good news in store for luxury car buyers. India is in talks with the European union (EU) and if everything works well then the government is likely to agree to a 10% duty on fixed quota of cars imported from the EU. This could happen as a part of free trade agreement which is presently being negotiated between India and EU.
Imported cars presently attract 60% duty and car above 20,000 lakhs attract a whopping 75% duty. If the new tarrif structure comes in place then cars manufactured in Europe which include luxury car manufacturers such as BMW, Porshe etc could cost marginally more than what they cost in Europe as opposed to the present, almost Double the price.
However there will be a fixed quota of cars falling under the proposed duty structure which is limited to 2.5 lakh cars over a period of five years. The first year will have a quota of 40,000 cars and the quota will be increased by 5,000 in the subsequent years. EU wants India to extent the term beyond 5 years but the Indian government wants a review after five year upon which the future strategy will be formulated.
Indian Automobile industry has criticized the move to liberalize import saying that the move could affect the manufacturing industry as car makers will prefer to import cars directly to India rather than setting up manufacturing facilities in India. However if the duty structure becomes a reality then it will make both the car buyers and the car manufacturers happy as it could mean lower price for the customer and increased sales for the car manufacturer.