¨     India is preparing for a major shift in its trade and automobile policy. As negotiations with the European Union move closer to conclusion, New Delhi is considering a sharp reduction in import duties on European cars.
¨     The proposed change signals a significant opening of India’s protected auto market while carefully safeguarding domestic manufacturers.
¨     India is planning to reduce import tariffs on cars from the European Union from up to 110% to 40%, as both sides move closer to finalising a long-awaited free trade agreement (FTA).
Proposed Tariff Reduction Plan
¨     Under the proposed arrangement, India will lower peak import duties on EU-made cars to 40% from the current level of up to 110%.
¨     Initially, the tariff cut will apply to a limited quota of fully built cars priced above €15,000 (around ₹16.3 lakh).
¨     Over time, duties may be reduced further to as low as 10%, offering greater access to the Indian market for European automakers while gradually easing competitive pressure on domestic players.
Impact on European Automakers
¨     The tariff reduction is expected to benefit major European car manufacturers such as BMW, Mercedes-Benz, and Volkswagen.
¨     India has reportedly agreed to lower duties on around 200,000 internal combustion engine vehicles annually, though the final quota may still change.
¨     The move could improve pricing competitiveness and expand the footprint of European brands in India’s fast-growing automobile market.