India–EU FTA to Allow 1 Lakh European Car Imports at Lower Tariffs in First Year

The India–European Union Free Trade Agreement is set to significantly change the tariff structure for European cars entering India. Under the draft agreement, EU automakers will initially be allowed to export up to 1 lakh internal combustion engine and hybrid passenger vehicles annually to India at concessional import duties. The quota will gradually increase and reach 1.6 lakh vehicles per year from the 10th year of implementation.

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The tariff benefits will apply only to vehicles priced above €15,000, or roughly ₹16.6 lakh.

Cars priced between €15,000 and €35,000 will see the in-quota import duty fall from the current 110% to 35% in the first year, before gradually declining to 10% by the fifth year. For vehicles priced above €35,000, the duty will start at 30% in the first year and also fall to 10% over the same period.

The agreement also provides a separate quota for completely knocked-down, or CKD, internal-combustion and hybrid vehicles. This quota will initially be 75,000 units annually, while applicable duties will gradually reduce from current levels.

Electric vehicles and plug-in hybrids will not receive immediate benefits. Tariff concessions for these vehicles will begin only from the fifth year and will apply to models priced above €20,000. Their quota will start at 20,000 units and gradually increase in later years.

The new structure is expected to improve market access for European manufacturers while keeping tariff reductions controlled through quotas and price thresholds. For Indian buyers, the biggest impact is likely to be seen in premium and luxury imported vehicles rather than mass-market cars.