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India-EU Deal Details: India is preparing to make a big cut in the import tariff on cars coming from the European Union (EU). This move is part of the long-running Free Trade Agreement (FTA) negotiations between India and the EU. According to Reuters report, it may be announced soon.

According to the proposal, India is considering reducing the import duty on cars made in EU from the current 110 percent to 40 percent. If this decision is implemented, it will be considered a big step towards further opening up the Indian automobile market.

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India-EU trade deal: Which cars will benefit initially

Under this trade deal, tariff reduction will start with some selected cars. This discount will be applicable on those cars coming from EU fully assembled, whose price is more than 15,000 Euro i.e. about Rs 16.3 lakh.

The plan is to first reduce the import duty on these cars from 110 percent to 40 percent and later reduce it further to 10 percent. This will make it easier for European companies like Volkswagen, Mercedes-Benz and BMW to do business in India.

According to Reuters, sources have said that India has currently agreed to reduce duty on about 2 lakh internal combustion engine vehicles every year. However, the final number may change.

To ensure that domestic companies do not suffer losses, the government is planning to keep battery electric vehicles out of this exemption for the first five years. After this, reducing the tariff on electric vehicles can also be considered.

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Why is India important for the European Union

India is a big market for the European Union. India is considered the third largest market in the world after America and China. Despite this, entry into India is still very difficult for foreign car companies.

At present, import duty in India on cars made abroad ranges from 70 to 110 percent. Many global auto companies have already criticized this policy.

If import duty is reduced, European companies will be able to sell their cars at cheaper prices. This will enable them to launch new models in India and will also open the way for investment in manufacturing here.

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When can the announcement be made

This decision to reduce the tariff on car imports from the EU has come at a time when European Commission President Ursula von der Leyen is on a four-day visit to India. She has come to India with European Council President Antonio Costa to attend the Republic Day celebrations.

During this time an important conversation is to be held with Prime Minister Narendra Modi. It is believed that in this meeting, big announcements can be made on issues like free trade agreement, strategic defense partnership and making it easier for Indian professionals to travel to Europe.

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