TL;DR
BMW India warns that Chinese EV makers might exploit the India-EU FTA by setting up minimal assembly in the EU to bypass high Indian import duties, impacting local manufacturing.
BMW Group India has voiced significant concerns that Chinese electric vehicle (EV) manufacturers could exploit the proposed India-EU Free Trade Agreement (FTA) to gain backdoor entry into the Indian market. Hardeep Singh Brar, President and CEO of BMW Group India, warned that Chinese companies might establish minimal assembly operations in EU member states to qualify for reduced duties, thereby exporting vehicles to India at prices that local and existing foreign manufacturers, with higher local production costs, cannot match.
Currently, India imposes steep import duties on fully built vehicles to protect domestic manufacturing. The ongoing India-EU trade negotiations aim to lower these duties to 10-15% in phases. Without stringent safeguards, such as a minimum 55% local or regional content requirement, this tariff reduction could be misused by manufacturers lacking a genuine European manufacturing footprint. This apprehension is widespread across the Indian automotive sector, with domestic carmakers advocating for high price thresholds, limited import quotas, and strict value addition rules in the final agreement.
The industry's concern is particularly acute given that Chinese EV makers have faced restrictions entering India through foreign direct investment due to stricter norms. The potential use of the EU route as a workaround poses a threat to the investments made by companies committed to local manufacturing in India, potentially undermining the country's efforts to foster a robust domestic EV ecosystem.
