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Mercedes-Benz Urges India’s Next Government to Boost Free Trade for Luxury Car Market Growth

3 weeks ago
Mercedes-Benz Urges India's Next Government

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German automaker Mercedes-Benz is calling on India’s incoming government to establish more free trade agreements (FTAs) and lower trade barriers to enhance luxury car sales in one of the world’s largest automotive markets, according to the company’s India head.

Prime Minister Narendra Modi, known for his pro-business stance over the past decade, is vying for a rare third consecutive term as India’s national election concludes on Saturday.


Mercedes-Benz’s Vision for Economic Growth

When questioned about Mercedes-Benz’s priorities for the new government, Santosh Iyer, Managing Director and CEO of Mercedes-Benz India, highlighted the necessity of FTAs and reduced trade barriers. “In the mid to long term, we want the Indian luxury car market to grow,” said Iyer, underscoring the company’s robust growth in the country.


Rising Luxury Car Sales

The luxury car market in India has been on an upswing, driven by an increasingly affluent population willing to spend on high-end items. Mercedes-Benz, the top luxury car seller in India, achieved record sales in 2023.


Challenges from High Import Taxes

Despite the growth, analysts note that the absence of FTAs and the presence of high import taxes on cars and components deter local production expansion. India imposes a 100% import tax on fully built cars priced above $40,000, posing a significant challenge for manufacturers.

Mercedes-Benz previously indicated in 2022 that a comprehensive trade deal with the European Union could enhance its production capabilities in India and potentially facilitate exports.


Progress on Free Trade Agreements

Under Modi’s administration, India has finalized FTAs with Australia, the United Arab Emirates, and a four-nation European bloc. However, it has missed several deadlines for trade deals with the UK, and negotiations with the EU are still underway. Talks with the EU resumed in 2022 after a nine-year hiatus caused by tariff disputes and other issues.


Mercedes-Benz’s Continued Growth in India

In 2023, Mercedes-Benz sold 17,408 cars in India, reflecting a 10% increase from the previous year. The company, which has been operational in India for 30 years, assembles some of its vehicles in the western city of Pune.