The Indian government has reportedly reached an agreement with the EU to lower tariffs on cars imported into India from the bloc from 110% to 40%.
Tariffs Could Go Lower
The two governments are expected to announce the deal this week, with the tariffs on imported cars further going down to 10% over time, Reuters reported on Sunday.
The agreement would see an immediate reduction in tariffs by the Indian government on cars with an import price of around 15,000 Euros (approximately $17,700), anonymous sources cited in the report said, adding that it could offer reduced tariffs for as many as 200,000 vehicles. However, the conditions are subject to change as talks are still ongoing between the two parties.
How This Could Affect Tesla, Stellantis
India is the third-largest car market in the world and reduced tariffs could benefit the likes of Tesla Inc. (NASDAQ:TSLA) and Stellantis NV (NYSE:STLA).
While the agreement reportedly excludes any reduced tariffs on EVs for the first five years of the deal, it could ultimately prove to be a boost for the Elon Musk-led EV giant, which has so far struggled to make an impact in the Indian market.
Tesla could, in the future, supply vehicles to the Indian market from its Gigafactory in Berlin to enjoy lower tariffs. Vehicles sold in the Indian market by the automaker are currently imported from Tesla's facility in Shanghai.
Tesla's Chinese rival BYD Co. Ltd. (OTC:BYDDY) (OTC:BYDDF), on the other hand, had recorded a surge in the Indian market last year. BYD has been steadily bolstering its presence in the country as tensions between New Delhi and Beijing ease.
However, the deal could prove to be a major boost for Stellantis, which has brands like Jeep as well as French automaker Citroen in the market, both of which have struggled to expand. While both Jeep and Citroen vehicles are manufactured locally, the reduced tariffs could help Stellantis expand its portfolio in the market.
US-India Deal?
While the EU and India reached a deal, a similar deal hasn't yet been reached by the U.S. and India. U.S. still levies a 50% tariff on India, with the Trump administration further threatening additional tariffs should India continue to seek Russian oil.
A trade deal with India was also reportedly opposed by Vice President JD Vance, along with Peter Navarro and Trump himself on occasion, a new report based on a leaked audio featuring Sen. Ted Cruz (R-TX) said.
The ideal would also see yet another ally bypass the U.S. after Canada’s move to allow up to 49,000 Chinese-made EVs into the market at reduced tariffs. The move has been criticized by Trump, as well as Transportation Secretary Sean Duffy.
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