India–EU FTA: New Delhi likely to cut car import tariffs from 110% to 40% - report

India is readying a large simplification successful import tariffs connected cars from the European Union, cutting duties to 40 per cent from levels arsenic precocious arsenic 110 per cent, successful what would beryllium the country’s biggest opening yet of its intimately guarded automobile market.

The determination comes arsenic New Delhi and Brussels adjacent successful connected a long-awaited escaped commercialized statement (FTA), which could beryllium announced arsenic aboriginal arsenic Tuesday.According to sources briefed connected the talks, the Modi authorities has agreed to instantly little import taxes connected a constricted fig of cars from the 27-nation EU with an import terms supra 15,000 euros, quality bureau Reuters reported. Over time, these duties could beryllium reduced further to 10 per cent, importantly easing entree to the Indian marketplace for European automakers specified arsenic Volkswagen, Mercedes-Benz and BMW.

Big displacement for a protected car market

India presently levies import duties of 70 per cent to 110 per cent connected overseas cars, a argumentation often criticised by planetary car executives, including Tesla CEO Elon Musk. Under the proposal, New Delhi has offered to slash duties to 40 per cent instantly for astir 200,000 combustion-engine cars annually, arsenic per Reuters, marking its astir assertive determination yet to unfastened up the sector. Battery electrical vehicles volition beryllium excluded from work cuts for the archetypal 5 years to support home players specified arsenic Tata Motors and Mahindra & Mahindra, aft which akin reductions could apply.

Lower tariffs would payment European manufacturers, whose stock of India’s 4.4-million-unit yearly car marketplace remains nether 4 per cent. With the marketplace expected to turn to six cardinal units by 2030, the projected cuts could let automakers to trial request with imported models earlier committing to deeper section manufacturing investments.

Trade boost amid planetary tariff pressures

The broader FTA is expected to importantly grow bilateral commercialized and assistance Indian exporters offset the interaction of steep US tariffs. The EU is already India’s largest trading spouse successful goods, with bilateral commercialized valued astatine $136.53 cardinal successful 2024–25, portion services commercialized stood astatine implicit $83 billion. The woody is besides seen arsenic a strategical measurement to diversify proviso chains and trim dependence connected China amid shifting planetary commercialized dynamics.

‘Mother of each deals’ nearing conclusion

India and the EU are expected to denote the decision of negotiations for the FTA this week, a pact that commerce and manufacture curate Piyush Goyal has dubbed the “mother of each deals”. Talks for the statement began successful 2007 and are present nearing the decorativeness enactment aft astir 18 years. The announcement is expected during the India-EU Summit connected January 27, with Prime Minister Narendra Modi acceptable to clasp talks with European Commission President Ursula von der Leyen and European Council President Antonio Costa.