Tag - Free Trade Agreement India EU

Key Highlights Skoda India halts plans to launch imported vehicles due to uncertainty over customs duties. The company delays local EV manufacturing, awaiting clarity on advanced fuel efficiency guidelines. Free Trade Agreement talks between India and the EU could reshape Skoda’s future strategy. Skoda Auto India finds itself at a crossroads as it halts plans to launch imported vehicles and delays local EV manufacturing. The Czech automaker’s decision stems from uncertainty surrounding customs duties and evolving government policies, which have created a challenging environment for premium carmakers in India. Why the hold? The company had ambitious plans to introduce fully-built petrol, diesel, and electric vehicles through the Completely Built Unit (CBU) route. Models like the Superb Diesel 4X4, Octavia RS, and the Enyaq electric SUV were ready for launch but have now been put on hold. Skoda’s Brand Director, Petr Janeba, explained that the company is awaiting clarity on customs duties, which are expected to see a downward revision under a proposed Free Trade Agreement (FTA) between India and the European Union. The import duty impact India currently imposes steep customs duties of up to 110% on vehicles priced above $40,000 and 70% on those below this threshold. The FTA, if finalized, could reduce these duties to as low as 10%, making imports more feasible for European automakers. However, until the agreement is signed, Skoda has decided to pause its plans, citing the financial risks of launching high-priced imported models under the current tariff regime. Affect on Skoda India imports The delay also affects Skoda’s plans to locally manufacture electric vehicles. The company is waiting for the Indian government to finalize advanced fuel efficiency guidelines under the Corporate Average Fuel Efficiency (CAFE 3) norms. These guidelines are crucial for determining the feasibility of local EV production, which Skoda sees as a long-term strategy for the Indian market. Despite these setbacks, Skoda remains committed to the Indian market. The company recently launched the second-generation Kodiaq SUV, assembled locally at its Chhatrapati Sambhaji Nagar facility. Skoda is also focusing on exports, leveraging India as a manufacturing hub for global markets. Industry experts believe that Skoda’s cautious approach reflects the broader challenges faced by premium automakers in India. The high cost of imports, coupled with evolving regulatory requirements, has made it difficult for brands to navigate the market. However, the potential benefits of the FTA and the growing demand for EVs could provide a silver lining for Skoda’s future plans. Also read: After 25 years in India, Skoda has less than 2% market share