Archive · 12 Sep 2026
India-EU Trade Deal Opens Car Market Through Lower Duties
India and the European Union have agreed on special rules for importing cars.
European car companies will initially be allowed to sell up to 100,000 cars each year in India at lower taxes.
This limit will grow over time.
Only cars costing more than €15,000 will receive the main discount.
Some cars will see their import tax fall to 10% after several years.
Separate limits will apply to cars shipped in partly assembled form and to electric vehicles.
Analyst Ajay Srivastava said the first quota is much larger than the number of EU cars India imported in 2025.
The agreement could make European cars cheaper in India but may also lead other countries to request similar treatment.
European Union carmakers can initially export up to 100,000 passenger vehicles annually to India at concessional duties.
The quota will gradually increase to 160,000 vehicles from the 10th year of implementation.
Cars priced above €15,000 will receive concessions, while cheaper cars remain excluded.
In-quota duties on eligible completely built-up cars will eventually fall to 10%, depending on vehicle type and price.
Analyst Ajay Srivastava said the quota is nearly six times India’s 2025 EU car imports and could prompt similar demands from Japan and South Korea.
- Who
- The Government of India and the European Union, including European carmakers, are involved; analyst Ajay Srivastava commented on the terms.
- What
- The India-EU free trade agreement will provide quotas and lower import duties for eligible EU passenger vehicles.
- When
- The draft agreement was released on Friday; concessions and quotas will be introduced and expanded over several years.
- Where
- The measures apply to European vehicles imported into the Indian market.
- Why
- To provide European carmakers with preferential access to India through concessional tariffs and vehicle quotas.
Market Access Benefits
Trade and Domestic-Market Concerns
Size of the vehicle quota
Market Access Benefits
The agreement gives European carmakers a structured route to sell more vehicles in India at lower duties.
Trade and Domestic-Market Concerns
Ajay Srivastava said the initial 100,000-car quota is almost six times India’s 2025 EU imports, representing a substantial opening of a sensitive market.
Precedent for other trade partners
Market Access Benefits
The concessions create preferential access under the India-EU free trade agreement.
Trade and Domestic-Market Concerns
Srivastava warned that Japan and South Korea may seek similar preferential market access and generous tariff-rate quotas.
- Initial passenger-vehicle quota
- 100,000 EU vehicles annually
- Long-term passenger-vehicle quota
- 160,000 vehicles from the 10th year onwards
- Minimum eligible car price
- €15,000 for the main passenger-vehicle concessions
- Initial duty for €15,000–€35,000 cars
- 35% in Year 1, falling to 10% in Year 5
- Initial duty for cars above €35,000
- 30% in Year 1, falling to 10% in Year 5
- 2025 EU car imports
- India imported 17,191 cars from the EU
- Broader eventual vehicle quota
- Expected to reach 250,000 units, including internal-combustion, hybrid and electric vehicles