Mercedes-Benz, a leading German automaker, is advocating for India’s next government to implement more free trade agreements (FTAs) and decrease trade barriers to facilitate the growth of luxury car sales in one of the largest global automobile markets.
This perspective was shared by the company’s India managing director and CEO, Santosh Iyer.
With the Indian national election concluding on Saturday, all eyes are on Prime Minister Narendra Modi, who is seeking an unprecedented third term after promoting a business-friendly reputation over the past decade.
Iyer expressed his aspirations for the Indian luxury car market, emphasizing the potential benefits of enhanced economic integration.
“In the mid to long term, we want the Indian luxury car market to grow,” Iyer stated, affirming the company’s robust growth trajectory in India.
The demand for luxury cars has seen a notable increase, driven by a burgeoning affluent class with more disposable income for high-end products.
In 2023, Mercedes-Benz achieved record sales in India, maintaining its position as the top luxury car brand in the country.
However, the expansion of the luxury car market is hindered by the absence of extensive FTAs and high import taxes on cars and automotive parts, which discourage manufacturers from ramping up local production.
Currently, India imposes a 100% import tax on fully built cars valued over $40,000. Analysts suggest that more favorable tax conditions, as seen in FTAs, could significantly benefit the automotive sector.
In 2022, Mercedes-Benz highlighted the potential advantages of a comprehensive trade agreement with the European Union, which could enhance local production capabilities and possibly lead to exports from India.
While Modi’s administration has successfully negotiated FTAs with countries like Australia and the UAE, as well as a European bloc, some negotiations, such as those with the UK, have faced delays, and talks with the EU only resumed in 2022 after a nine-year hiatus.
Last year, Mercedes-Benz reported selling 17,408 vehicles in India, marking a 10% increase from the previous year.
The company has a longstanding presence in India, with a history of 30 years and operates an assembly facility in Pune, western India.