India-EU trade deal to slash tariffs on luxury cars above ₹25 lakh

India and the European Union (EU) have concluded talks on a Free Trade Agreement (FTA) that will cut tariffs on EU-made non-electric cars priced above ₹25 lakh in India, a move expected to benefit European luxury automakers. The formal signing will follow legal review, likely taking six months, with the pact expected to come into force in 2027.

 

Tariffs on non-EV cars with a retail price above ₹25 lakh will drop to 30–35% from the current 66–110%, according to India’s Commerce Ministry. The ministry clarified that the threshold refers to the actual

landing price of €15,000 euros (₹ 15 lakh) at Indian ports, before taxes, registration, GST of 28-40%, insurance, freight, and logistics.

Duty concessions will be applied through quotas that rise over time, with segmented market access for EU exports of internal combustion vehicles, EVs, and heavy vehicles. In-quota duties will gradually fall to 10% over five years, while Indian cars will receive duty-free access to the EU market.

The move is likely to benefit European car makers like BMW, Mercedes-Benz, Volkswagen, Maserati, Ferrari, Lamborghini, Bugatti, Renault, and many other EU-based automobile companies aiming the ₹25 lakh-plus car market in India.

 

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Several auto companies import premium luxury cars as completely built units (CBU), while many assemble their luxury models in India. EU's market size for cars is around 10 million, while India's market size is around 5 million.

 

The Commerce Ministry said sensitivities on both sides influenced the threshold, ensuring the FTA does not affect India’s mass-market cars priced between ₹10–15 lakh. It noted strong interest from EU manufacturers in India’s high-end segment.

India is encouraging EU automakers to establish operations locally, integrate supply chains, and generate jobs, technology transfer, and wider consumer choice. India’s export quota for cars will be 2.5 times that of the EU. At the same time, EV import quotas will take effect from the fifth year of the FTA, designed to protect India’s growing EV ecosystem.