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    Indian car makers have proposed a dramatic cut to the tax rate on imported cars, an unprecedented move that comes as Liz Truss
    scrambles to hammer out a much-anticipated post-Brexit trade agreement with the
    nation. 

    It is the first time Indian manufacturers have backed such
    cuts, caving to pressure from a government that wants them to lower entry barriers
    and ease access to one of the world's most protected automotive markets.


    Current import taxes from 60 per cent to 100 per
    cent in the world's fourth-largest car market rank among the highest globally, drawing criticism from companies such
    as Tesla, which shelved entry plans because of the high tariffs.



    But the Society of Indian Automobile Manufacturers (SIAM) has written to the government backing phased cuts to 30
    per cent over five years, following a grace period of five years with none, three sources said, speaking on condition of anonymity.


    It was not immediately clear if India had presented the offer
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    Yet both sides have indicated that work remains to be done,
    even as the deadline fast approaches.






    A major tax cut on foreign car imports could represent a major boost for
    British Prime Minister Liz Truss who is currently
    negotiating a free trade agreement with India (Truss pictured in March 2022 in New Dehli while working as foreign secretary)







    Prime Minister Liz Truss is pictured during a visit to Jaguar Land Rover in Solihull as
    part of her leadership campaign on August 23, 2022 in Solihull,
    England







    India's push comes in an effort to boost trade ties globally, that saw deals recently signed with Australia and
    the United Arab Emirates among other nations (Indian Prime Minister
    Narenda Modi is pictured)







    Truss is continuing talks started by former PM Boris Johnson (left), who
    in April of this year met Modi and set an ambitious target to sign an FTA agreement by Diwali


    For years, Indian car makers have resisted tax cuts
    so as to protect their turf, while arguing that such
    a move would dry up investment in domestic manufacturing by making imports
    cheaper and easier for global automakers.

    While Britain has few car factories run by the likes of Nissan, BMW
    and Tata's Jaguar Land Rover, companies fear the move could set a precedent in negotiating
    deals with others like the European Union (EU), Japan or South Korea, the sources said.


    The shift in stance comes weeks after commerce minister
    Piyush Goyal firmly told senior executives of companies such as Maruti
    Suzuki, Tata Motors and Mahindra that India needed to make some kind of offer
    to Britain on autos.

    'The message from Goyal was clear - if companies don't come up
    with a proposal on lowering taxes, the government will do it for them,' said one person who
    attended an August meeting between the minister
    and company executives. 






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    India's push comes in an effort to boost trade ties globally, that saw deals recently signed with Australia and the United Arab Emirates, so as to attract investment from
    companies seeking to diversify beyond China.



    Britain is in the offing to become a major trade partner
    with India, and a major tax cut to imported cars will likely be well received by negotiators in the course of hashing out a hotly-anticipated FTA.


    But UK government spokesperson said earlier today that Britain said it will only sign a trade deal with India when there is one that 'meets the
    UK's interests,' in response to comments from Delhi that
    talks needed to be a win-win for both sides.


    'We remain clear that we won't sacrifice quality for speed and will only sign when we have a deal
    that meets the UK's interests,' a spokesperson said. 

    Meanwhile, one Indian government source said the plan to cut tax rates to 30 per cent over 10
    years 'is not enough'.

    One of the sources said: 'One view is to ease access for luxury cars sooner
    than other categories.

    The industry has no issues opening it up and lowering rates earlier.'






    Embattled PM Liz Truss is aiming to complete a free trade agreement
    with India before the end of October as part of a post-Brexit trade plan







    Employees work on a Jaguar XJ automobile in the body shop on the production line at Tata Motors Ltd.'s Jaguar assembly plant in Castle Bromwich, UK.


    Indian car makers have for years protected their domination of the
    fourth-largest automotive market in the world, pushing to
    maintain sky-high tax rates on foreign imports







    SIAM, which groups car makers including India's top-seller Maruti
    Suzuki (Suzuki car pictured) is believed to have written to India's government proposing
    a dramatic cut on tax rates for foreign vehicles


    High tax on imported cars was one of the major dealbreakers in previous EU trade talks that ended in 2013, with Indian marques concerned that European manufacturers would swoop
    in and devastate their market share.

    A few EU nations, particularly Germany and France, are home
    to huge car firms such as Volkswagen AG, Mercedes-Benz and
    Renault that count India as a major growth market, and pose
    a far greater threat than British manufacturers to Indian automotive companies.  

    Some companies also worry that with large investments going into
    clean mobility, easy import of electric vehicles runs the risk of hurting local players, they
    added.

    'Everyone is acting on a lot of apprehension and few
    data points on what impact a duty cut can have,' one of the
    sources said.

    SIAM, which groups car makers from India's top-seller Maruti Suzuki, to major
    companies such as Tata Motors and Mahindra & Mahindra, did not immediately respond to a request for comment by Reuters.


    The commerce ministry, which is leading the trade talks, also did not
    respond.





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