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India-EU Trade Deal: Will Tariffs on Cars Be Lowered?

India-EU Trade Deal: Will Tariffs on Cars Be Lowered?
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India-EU Trade Pact Enters a Crucial Phase

India-EU Trade Pact Enters a Crucial Phase : India and the European Union have concluded a long-pending trade agreement aimed at lowering tariffs on a wide range of goods. One of the most closely watched outcomes is the planned reduction in import duties on European cars, a segment that has long faced steep barriers in India.

Sharp Duty Cuts for High-End European Cars

Sharp Duty Cuts for High-End European Cars : Under the proposed deal, India is set to immediately lower import tariffs on premium European cars to around 30%, from levels that previously went as high as 110%. This move is expected to significantly ease market access for luxury brands such as Mercedes-Benz and BMW.

Biggest Relief for Cars Above €35,000

Biggest Relief for Cars Above €35,000 : The steepest tariff reductions will apply to vehicles priced above €35,000. Cars in the €35,000–€50,000 range, as well as those priced higher, are expected to face a 30% duty, making premium imports far more viable compared to earlier norms.

Import Quotas and Phased Expansion

Import Quotas and Phased Expansion : India has agreed to allow a fixed number of imported internal combustion engine cars each year across multiple price bands. While annual volumes will be capped initially, the total import allowance is set to expand gradually over a decade, giving European automakers room to scale up.

What It Means for India

What It Means for India’s Luxury Car Market : Although luxury cars account for less than 1% of India’s passenger vehicle sales, demand is steadily rising. Lower tariffs may not immediately translate into cheaper prices, but they will allow global carmakers to bring a wider range of models to Indian showrooms.

Electric Vehicles Get Delayed Relief

Electric Vehicles Get Delayed Relief : Import duties on European electric vehicles will also be reduced to around 30–35%, but only five years after the agreement takes effect. These concessions will apply mainly to EVs priced above €20,000, ensuring domestic manufacturers remain protected in the near term.

A Strategic Shift in India’s Trade Policy

A Strategic Shift in India’s Trade Policy : The India-EU trade deal signals a broader shift toward opening select sectors while balancing local industry interests. For European automakers, it offers long-awaited access to one of the world’s largest car markets, while for India, it supports technology transfer, supply-chain integration, and a gradual expansion of the luxury auto segment. The above information is based on a Reuters report and is for educational purposes only.

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