BMW builds several models in India at its Chennai plant, but most of its vehicles are imported from other countries. The company has long supported open markets and global free trade, lobbying for lower tariffs. It therefore comes as no surprise that CEO Oliver Zipse welcomed the historic deal reached today between the European Union and India.
Before the agreement was signed, vehicles manufactured in the EU and imported into India were subject to tariffs ranging from 70 to 110 percent. Under the deal, rates will be cut immediately to 30-35 percent, before dropping to 10 percent over the next five years, within an annual quota of 250,000 cars. Speaking to Reuters, BMW’s chief executive praised the agreement to sharply reduce tariffs:
“It is extremely important for Germany as an export nation, which we want to remain — we are very pleased that things are now moving quickly, that we are expanding multilateral relations rather than cutting them off.”
Although the exclusion of EU-made vehicles priced below €15,000 does not affect BMW, given its premium positioning, the decision makes sense as India seeks to protect locally assembled budget cars from an influx of imports. BMW is, however, impacted by the decision to delay tariff cuts for electric vehicles until 2031.
Within five to ten years, tariffs on car components originating from the European Union’s 27 member states will be abolished. This should help BMW and other automakers better manage supply chains for vehicles shipped to India.
Source: Automotive News Europe, Reuters