India-EU FTA: BMW, Mercedes and other European cars may get cheaper
India and the European Union’s proposed free trade agreement could bring a sharp rise in the number of European cars entering the Indian market. The draft deal allows a tariff-rate quota of 100,000 cars in the first year, compared with just 17,191 cars imported from the EU in 2025, reported Indian Express.EU GETS LOWER TARIFFS ON CARS
The draft India-EU FTA, released by Brussels, shows that the European Union has secured a first-year quota of 100,000 completely built-up internal-combustion engine and non-plug-in hybrid cars. This is nearly six times the number of cars India imported from the EU last year.
The quota will gradually increase and reach 160,000 cars by the 10th year of the agreement.
However, the lower tariffs will not apply to all cars. The concession is available only for vehicles priced at 15,000 euros or more. India has not offered any tariff concession on cars priced below 15,000 euros, protecting domestic carmakers from cheaper European models.
For cars priced between 15,000 euros and 35,000 euros, the import duty will fall from 110% to 35% in the first year and eventually to 10% in the fifth year.
For cars priced above 35,000 euros, the tariff will come down from 66% to 30% in the first year and to 10% over the same period. From the fifth year, 43,000 cars priced above 50,000 euros will be covered by the quota.
The changes could make it easier for European luxury carmakers to bring more models into India.EV CONCESSIONS TO START LATER
The proposed deal also includes concessions for electric vehicles, plug-in hybrids and cars using other technologies, but these will begin only from the fifth year.
The concessions will apply only to vehicles priced at 20,000 euros or more. The quota for completely built-up EVs and other eligible vehicles will start at 20,000 cars in the fifth year, rise to 50,000 by the 10th year and reach 90,000 from the 14th year onwards.
Cars priced below 20,000 euros will not receive any tariff concession.
Global Trade Research Initiative (GTRI) said the EU will become the second major trade partner after the UK to secure automotive tariff concessions from India under a free trade agreement.
The think tank said this could lead to similar demands from other major trading partners, including Japan and South Korea, for preferential access and larger tariff-rate quotas.STEEL ALSO GETS EXPORT QUOTA
The draft FTA also gives India a 1.64 million tonne steel export quota to the EU across 16 categories. These include specialised products such as metallic coated sheets and stainless hot-rolled quarto plates.
The quota is split into two parts. The FTA component accounts for 0.69 million tonnes and is assured for India, while another 0.95 million tonnes comes under the most-favoured-nation quota, where Indian exporters will compete with suppliers from other countries.
India currently exports around 4 million tonnes of steel to the EU.
The quotas come against the backdrop of the EU’s Steel Overcapacity Regulation, which took effect on July 1. The regulation provides duty-free quotas of 18.3 million tonnes, with a 50% duty on imports above the quota.
An ICRIER note said India could improve its position in the European market by moving towards higher-value-added steel products, which could also reduce the impact of the Carbon Border Adjustment Mechanism (CBAM).
The note also called for industrial policies combining Production Linked Incentives with dedicated research and development funding, along with financial and technical support to help smaller businesses deal with the higher compliance burden.
The European Commission has now forwarded its proposal for concluding the India-EU FTA to the European Council. The move indicates that the agreement could be formally signed soon. The EU has described it as potentially the largest trade agreement concluded between the two sides.- EndsPublished By: Jasmine anandPublished On: Sep 14, 2026 12:01 IST
