Indian Economy News

India-EU trade pact could boost overseas expansion of Indian 2W firms: Industry

The successful conclusion of the Free Trade Agreement (FTA) between India and the European Union (EU) provides significant future growth opportunities to domestic manufacturers of two-wheeled vehicles (2W).  According to industry experts, the FTA will offer a great opportunity for Indian companies to extend their operations in the EU by reducing trade barriers and making them more competitive in the global marketplace.  According to Hero MotoCorp’s CEO Mr. Harshavardhan Chitale, this is an opportunity to establish a strong business relationship, which will enable Indian manufactured products to succeed and become more integrated into global supply chains.  TVS Motor Company’s Chairman, Mr. Sudarshan Venu, noted that the FTA will alter the way business is conducted and provide Indian manufacturers with new ways to innovate and compete on a global basis.
A deal has been reached to eliminate the existing 10% tariff on Indian cars exported to the EU. This creates an opportunity to establish a large competitive advantage for Royal Enfield, which is already obtaining 26% of its total exports from the EMEA (Europe, Middle East and Africa) region. As such, exports from India to the EU account for only 1% of total Indian 2W exports at present, but there’s a tremendous amount of growth potential available in this segment with the introduction of new tariff structures soon. The current level of merchandise trade between India and the EU is Rs. 11.5 trillion (US$136.54 billion) for FY 2024-25, creating a strong economic foundation for this expansion. The agreement also includes regulatory cooperation, R&D, and innovation, which will facilitate the increased use of electric vehicles (EVs) within the EU and spur additional export growth while improving India’s position as a global trade hub.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.