The best-selling European automotive brand operating in India, Skoda Auto Indiarecently launched Kodiaq SUV in the country via CKD route. The company has had multiple new vehicles lined up to launch in India via CBU route. These included Petrol and Diesel powered vehicles along with EVs.
However, these vehicle import plans have been temporarily halted amidst the ongoing talks of a FTA (Free Trade Agreement) between Indian Government and European Union. According to Director of Skoda Auto India, Petyr Janeba, there will be a resolution on customs duty within the next three times and the company will then decide to greenlight future imports.
Skoda India To Halt Import Plans
Tariffs seem to be the talk of automotive town recently with US President Donald Trump making multiple headlines. Escalation and reduction of tariffs by US Government has created a certain uncertainty for many brands. For India, however, things are not so chaotic as the Indian Government is on the verge of signing a bilateral trade deal with the US.
For carmakers like Skoda Auto India, what matters more is the ongoing talks between Indian Government and European Union regarding an FTA (Free Trade Agreement) and both parties are likely to finalise this deal by the end of this year. Under this FTA, India is likely to reduce customs duty on cars by up to 100%.
For context, Indian Government currently levies up to 70% customs duty on vehicles that are priced below USD 40,000 (approx Rs 34.15 lakh). For vehicles that are priced above USD 40,000, customs duty increases to a staggering 110%. Once signed, this FTA with European Union will ensure European car brands like Skoda to import vehicles at just 10% customs duty.
Which cars are delayed?
Till the company gets clarity on customs duties, Skoda Auto India seems to have decided to halt any planned CBU vehicle launches. These include Superb Diesel 4X4 sedan, Kodiaq Diesel 4X4 SUV, Octavia and Octavia RS. It has to be noted that the recently launched Kodiaq SUV in Sportline and L&K trims are assembled at the company’s facility in Chhatrapati Sambhaji Nagar.
Along with these ICE vehicle imports, Skoda has also halted the import of Enyaq electric SUV. The company also has plans to locally manufacture Enyaq in India. Which has been now deferred till Indian Government finalises on advanced fuel efficiency guidelines under CAFE 3 guidelines (Corporate Average Fuel Efficiency) as mentioned by Skoda Auto India Director Petyr Janeba.
He further mentioned that it currently doesn’t make sense to proceed with CBU vehicle launch plans when there is a major downward revision expected in customs duties. Within the next three months, there will be a resolution on customs duty and then the company can decide on launching EVs and premium Diesel vehicles.
