EU, US tariff hikes on Chinese electric cars could drive automakers to turn to India

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MUMBAI: Chinese electric vehicle (EV) makers could hasten their shift to India, said observers, following decisions by the European Union and the United States to raise tariffs on imported Chinese EVs.

However, observers noted that New Delhi will be concerned about giving too much market access to its rival despite benefiting from increased Chinese investment.

It will also want to avoid becoming a “dumping ground” for Chinese EVs due to the higher levies, which could harm Indian businesses in the same sector. 

“China is going to try and dump where it can. India has put up strong defences to prevent that kind of dumping,” Mr Utkarsh Sinha, managing director of boutique advisory firm Bexley Advisors, told CNA.

“But India is a growth market and India is an attractive market. There is going to be a way India and China can end up working together,” Mr Sinha added.

The EU announced last Wednesday (Jun 12) that it would impose tariffs of up to 38.1 per cent on Chinese EV imports. 

This was the result of an EU probe into alleged unfair state subsidies given to China’s car manufacturing industry that posed an economic threat to European rivals. It was also a bid by the bloc to tackle Chinese industrial overcapacity flooding the EU.

The level of tariffs set for specific EV makers depended on the level of state subsidies received by the firms.

The tariffs are set to kick in on Jul 4, but could be adjusted as Chinese companies have until then to provide evidence that could challenge the EU’s findings.

They come on top of an existing 10 per cent levy on cars imported into the EU.

Last month, US President Joe Biden announced a 100 per cent tariff on Chinese-made EVs to protect US manufacturers from cheaper imports. Both superpowers have been in a trade war for years.

INDIA’S EV SECTOR STILL NASCENT

Despite concerns about dumping, experts said the entry of Chinese carmakers presents opportunities for India.

Mr Sinha noted: “Moves like this create manufacturing hubs – whether it's India, Indonesia, Japan, those EVs need to go to the US or the EU from somewh...

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