Archive · 14 Sep 2026
India-EU Trade Deal Offers Gradual Duty Relief For Cars
India and the European Union have agreed on draft rules for selling Indian-made cars in Europe.
The EU will let 250,000 qualifying cars enter each year at a lower import tax in the first year.
These cars must generally use internal-combustion or hybrid technology and cost no more than €50,000.
The lower tax will gradually decrease and reach zero in the fifth year for this category.
The number of cars allowed under the quota will eventually rise to 400,000 a year.
Electric and other types of cars will have separate quotas that begin in the fifth year.
Cars outside the quotas or price limits may face different or higher duties.
The agreement was announced on January 27 and is expected to be signed later this year and possibly begin next year.
The European Union will allow 250,000 Indian-made passenger vehicles annually at an 8% concessional duty in the agreement’s first year.
The initial quota covers Indian-origin internal-combustion and hybrid vehicles priced up to €50,000 on a CIF basis.
For vehicles within that category, the duty will fall to zero in the fifth year, while the quota will rise to 400,000 vehicles from the 10th year.
Separate quotas will apply from the fifth year to battery-electric, plug-in hybrid and other eligible vehicles across specified price bands.
Vehicles exceeding applicable quotas or price limits will face different tariff schedules, including most-favoured-nation duties beyond the quota.
- Who
- India and the European Union.
- What
- The draft India-EU free trade agreement provides tariff-rate quotas and progressively lower import duties for Indian-made passenger vehicles entering the EU market.
- When
- The agreement’s conclusion was announced on January 27 this year; it is expected to be signed later this year and may take effect next year.
- Where
- The European Union market.
- Why
- To establish reduced import duties and quotas for eligible Indian-origin passenger vehicles under the bilateral free trade agreement.
- First-year car quota
- 250,000 Indian-made passenger vehicles annually at an 8% concessional duty.
- Initial vehicle coverage
- Internal-combustion and hybrid passenger vehicles priced up to €50,000 CIF.
- Main duty schedule
- For the initial category, the duty falls from 8% to 6% in year two, 4% in year three, 2% in year four and zero in year five.
- Long-term quota
- The main annual quota gradually rises to 400,000 vehicles from the 10th year.
- Electric-vehicle quota start
- Separate quotas for battery-electric, plug-in hybrid and other eligible vehicles begin in year five.
- CIF meaning
- Cost, insurance and freight to the EU port of entry.
- Above-quota treatment
- Most-favoured-nation duty applies beyond the relevant quota.