Lagatar24 Desk
New Delhi: In a major policy shift, India is poised to reduce import duties on European Union cars from current levels as high as 110% to 40%, as part of a sweeping Free Trade Agreement (FTA) expected to be announced this week. The deal, which has been in negotiations since 2007, marks the most significant liberalisation of India’s automobile sector to date.
Big Shake-Up in India’s Protected Auto Market
According to reports, New Delhi will initially cut tariffs to 40% on a limited batch of EU-imported combustion-engine cars priced above €15,000. Around 200,000 such vehicles annually may benefit, significantly easing access for brands like Volkswagen, BMW, and Mercedes-Benz. The duties could be gradually lowered to 10% over time. However, battery electric vehicles will remain excluded from these cuts for the first five years to safeguard domestic players like Tata Motors and Mahindra & Mahindra.
Strategic Trade Expansion Amid Global Shifts
The FTA is seen as a major boost for bilateral trade between India and the EU, which currently stands at over $136 billion in goods and $83 billion in services. The agreement is also viewed as a strategic effort to diversify supply chains and reduce dependence on China. With India’s car market expected to grow to 6 million units by 2030, European automakers are likely to use this opportunity to test demand and plan local manufacturing.
Final Talks at India-EU Summit
The FTA announcement is anticipated during the India-EU Summit on January 27, where Prime Minister Narendra Modi will meet European Commission President Ursula von der Leyen and European Council President Antonio Costa. Commerce Minister Piyush Goyal has referred to the deal as the “mother of all agreements,” underscoring its transformative potential.
