EU Trade Deal May Give a Big Push to Tech Transfers, Exports & More
Overview of the Upcoming EU Trade Deal
– The details of the trade agreement between India and the European Union (EU) are eagerly awaited. Sources indicate that both parties have reached quota-based concessions for vehicles, along with plans for phased reductions in duties on auto parts.
Impact on Indian Auto Component Makers
– Europe has now become India’s largest export market for auto components, surpassing the US.
– The anticipated free trade agreement (FTA) with the EU, expected to be signed soon, is poised to amplify technology transfers, facilitate joint ventures, and boost exports.
Key Expectations From the Trade Agreement
– Industry leaders anticipate this FTA to be the largest India has ever signed, emphasizing the following benefits:
– Increased shipments of electric vehicles (EVs) and auto parts.
– Reduced costs for importing technology and machinery.
– Enhanced opportunities for joint ventures and technological collaborations between Indian and European manufacturers.
Advantages for Indian Manufacturers
– Multinational automakers utilizing India as an export hub for both electric and internal combustion engine (ICE) vehicles will see significant benefits. The most substantial long-term growth is expected for auto component suppliers.
– Prasanth Doreswamy, President and CEO of Continental India, highlighted that “lower tariffs and clearer trade rules will facilitate deeper integration for Indian suppliers into European value chains.”
Current Export Landscape
– India exported $3.73 billion in auto parts to Europe in the first half of FY26, marking an 11% increase from $3.36 billion the previous year.
– This surge positions Europe as the most significant market for Indian auto parts, overtaking the US, Asia, and Latin America.
Challenges in the US Market
– Indian auto parts manufacturers face increasing uncertainties in the US, primarily driven by tariff pressures that have slowed long-term export orders.
– Doreswamy pointed out, “The most considerable opportunity lies in exports to Europe and integration within its supply chain.”
Future Growth Opportunities
– Vinnie Mehta, Director General of the Automotive Component Manufacturers Association of India (ACMA), noted that this agreement could catalyze the next growth phase for India’s auto-component industry, enabling technology collaboration and boosting global competitiveness.
– Noteworthy strides are already being made by Indian vehicle manufacturers, with Maruti Suzuki exporting more than 13,000 units of its electric SUV, the e-Vitara, to 29 countries mainly in Europe.
Terms of the Agreement
– While specific details are still pending, mutual concessions for vehicles and phased duties reductions on auto parts have been established.
– Some cuts are anticipated to be immediate, others in the medium term, and further reductions over a decade could see duties diminish to zero.
Long-Term Vision and Potential
– G K Sharma, Chairperson for the India region at OPmobility, expressed that this agreement could foster new investments and collaborative developments.
– “With Europe under cost pressures, India presents a competitive landscape for manufacturing and technology partnerships,” he commented.
– Currently, India constitutes about 3% of global trade in advanced auto parts, with the government encouraging the industry to boost component exports to $60 billion by 2030, up from $20.1 billion in FY23.
Conclusion
The EU trade deal holds promise for significant advancements in technology transfers and exports, particularly within the automotive sector. By establishing a robust framework for cooperation and integration, this agreement could not only enhance India’s position in the global market but also pave the way for sustainable growth in the coming years.