After a years-long bout of negotiations, India and the European Union (EU) are reportedly close to announcing a landmark Free Trade Agreement (FTA). Under the terms of this FTA, cars built in Europe that qualify for certain criteria would see an immediate drop in import duties when sold in India – from up to 110 percent to 40 percent – with more reductions planned in the coming years. India signed a similar FTA with the UK last year.
- India-EU FTA could be announced by January 27
- EU-made cars priced above €15,000 qualify for 40 percent tariff in limited numbers
India-EU FTA details
Announcement likely by Tuesday
Reporting from Reuters suggests that the Indian government has agreed to immediately scale back duties on European-manufactured cars, among other commodities. The announcement of the India-EU FTA may come as early as Tuesday, January 27.
Import duty reduction criteria
Thanks to this FTA, import tariffs on limited quantities of EU-made cars priced above €15,000 (Rs 16.28 lakh) will come down to 40 percent from the prior ceiling of 110 percent. Over the coming years, these duties are expected to be further lowered to 10 percent.
Several European brands to benefit from the FTA
Expectedly, the India-EU FTA will benefit European carmakers. Luxury brands like BMW, Audi, Volvo, and Mercedes-Benz locally assemble lots of their models in India, so they already qualify for lower duties. However, performance offerings from the BMW M, Mercedes-AMG, and Audi RS divisions might see price reductions; the BMW M2 price will likely drop below Rs 1 crore (ex-showroom). Even the Land Rover Defender could see a price drop in India, since it’s imported from Slovakia.
Expect Ferrari, Lamborghini, Maserati, and Porsche cars to become more affordable in India too. Mass-market European carmakers like Volkswagen and Skoda should also benefit from the India-EU FTA, with halo models like the Golf GTI, Tiguan R-Line, Octavia RS, and the upcoming Kodiaq RS getting cheaper, and the path for importing newer models now more accessible.
