Mercedes-Benz Seeks Favorable Trade Policies to Boost Indian Market Presence

Mercedes-Benz, a prominent player in India’s luxury car market, is seeking favorable changes in trade policies under India’s new government administration. The German automaker is urging the government to negotiate more free trade agreements (FTAs) and lower trade barriers to boost its sales and expand production in this burgeoning market.

FTAs play a crucial role in the automotive sector by enabling more favorable tax regimes and the elimination of certain trade restrictions between countries. Mercedes hopes that reduced barriers and strategic FTAs could help them lower operational costs and enhance their market share in India.

India’s current import tax framework places a substantial burden on luxury car manufacturers like Mercedes. Cars priced above $40,000 are subjected to a 100% import tariff, considerably inflating the costs of these vehicles for Indian consumers and limiting market expansion for manufacturers.

Despite active efforts and some success in securing FTAs with countries like Australia and UAE, India has faced challenges in finalizing agreements with major economies like the UK and the EU. These delays and unresolved trade negotiations hamper the potential growth of luxury car operations in India.

Santosh Iyer, the CEO of Mercedes India, emphasized the company’s commitment to growth within the Indian market, which has shown robust potential with a rising affluent class. Mercedes reported a 10% increase in sales in 2023, signifying strong market dynamics despite prevailing fiscal hurdles.

As the Indian elections conclude, the automotive industry watches closely to see if the new government will prioritize reforms that could transform India into a more attractive market and production hub for luxury cars. Mercedes, celebrating 30 years in India, remains optimistic about its future in the Indian automotive landscape, contingent on more favorable trade conditions.