After years of negotiations, India and the European Union have finally concluded their long-awaited Free Trade Agreement, marking a major turning point for bilateral commerce. One of the most headline-grabbing outcomes is a steep reduction in import duties on European cars entering India, a move expected to reshape the country’s auto market. The deal is being seen as a win for consumers and manufacturers alike, opening the door to more affordable premium vehicles while strengthening India–EU trade ties. Here’s what the agreement means for buyers, brands and the broader economy.

From 110% to 10%: A Massive Tariff Reset

Under the agreement, import duties on European cars will be reduced from the current 110% to just 10. However, the cut will not happen overnight. The revised tariff structure will be implemented in phases, allowing the domestic industry time to adjust.

The government has also fixed an annual quota of 250,000 vehicles that will qualify for the concessional rate. This means premium and global models from Europe could soon become significantly cheaper in India, making luxury and high-tech cars more accessible to Indian buyers.

Until now, brands such as BMW, Mercedes-Benz, Volkswagen, Skoda and Renault have remained expensive due to heavy taxation. With tariffs easing, industry watchers expect noticeable price corrections, broader consumer choice and faster rollout of international models in the Indian market.

What It Means For Buyers

For Indian customers, the FTA promises better value, advanced technology and increased access to premium vehicles. Greater competition is also likely to push manufacturers to improve features and pricing across segments.

Beyond cars, the deal strengthens India-EU economic ties. In FY2024-25, bilateral trade crossed USD 190 billion. India exported USD 75.9 billion worth of goods and USD 30 billion in services to the EU, while European exports to India stood at USD 60.7 billion in goods and USD 23 billion in services.

For the auto sector, this agreement is being viewed as one of the biggest openings in decades. European manufacturers will find it easier to introduce new models, while Indian consumers stand to benefit from a more competitive marketplace.

Once implemented, the India-EU FTA is expected to usher in a new phase for India’s automotive industry, lowering prices, raising standards and accelerating integration with global markets. For buyers dreaming of European wheels at Indian prices, that future may now be closer than ever.