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Mahindra & Mahindra Ltd. led declines in auto stocks on Tuesday amid reports that the India-EU trade deal includes a clause to slash import duty on cars.
M&M's share price fell as much as 5.07% to ₹3,363.70 apiece on the NSE, even as Nifty Auto index was down 2.18% intraday. That, when the benchmark Nifty 50 breached the 25,000 mark.
India plans to slash tariffs on cars imported from the European Union to 40% from as high as 110%, Reuters reported on 25 January, in the biggest opening yet of the world's third largest car market, as New Delhi and Brussels close in on a free trade agreement that could come as early as today.
India-EU FTA: Import duty on cars
The Narendra Modi government has agreed to immediately reduce the import duty on 200,000 European cars per year, each with a sticker price of more than €15,000 (~ ₹16.5 lakh). Most SUVs of M&M and some of Tata Motors PV Ltd. are priced in that range. EVs are excluded from this clause.
The levy will be further lowered to 10% over time, they added, easing access to the Indian market for European automakers such as Volkswagen, Mercedes-Benz and BMW.
Car industry in India
India is the world's third-largest car market by sales after the US and China, but its domestic auto industry has been one of the most protected. New Delhi currently levies tariffs of 70% and 110% on imported cars.
European carmakers currently hold a less than 4% share of India's 4.4-million units a year car market, which is dominated by Japan's Suzuki Motor as well as homegrown brands Mahindra and Tata that together hold two-thirds.
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