India-EU Auto Trade Pact: A Catalyst for Competitive Growth

A new trade agreement between India and the European Union is poised to redefine competitive dynamics and market access for both regions, according to a report by Icra. The deal is expected to facilitate better access for Indian auto and component makers to European markets, potentially propelling the sector's growth prospects in the long run.

The agreement is anticipated to significantly lower duties on EU-manufactured vehicles from 110% to 10% for a fixed annual quota, focusing on vehicles with an import price exceeding €15,000. This reduction is expected to ease the entry of premium European brands into India's burgeoning automobile market.

While the mass market segment may experience minimal disruption, the Icra report highlights enhanced competitive conditions for Indian exporters. Better trade terms could lead to increased export volumes and stronger ties with global supply chains, bolstering India's automotive components industry's position on the world stage.