Archive · 14 Sep 2026
India-EU FTA Opens Car Markets Through Tight Quotas
India and the European Union have prepared a trade deal that would make it easier to sell some cars in each other’s markets.
In the first year, India could let up to 100,000 qualifying European petrol, diesel and hybrid cars enter with lower taxes.
The number could grow to 160,000 cars by the 10th year.
Cars costing less than €15,000 would not receive this benefit.
The EU would allow 250,000 eligible Indian-made cars at lower duties in the first year, with the number rising to 400,000 later.
Electric and plug-in hybrid vehicles would have separate rules that begin in the fifth year.
The deal would also cover locally assembled car kits, wine and selected farm products.
It has not been signed or approved yet, so the changes are not in force.
India would allow up to 100,000 EU-built ICE and hybrid cars annually at concessional duties in the first year, rising to 160,000 from Year 10.
Eligible Indian passenger cars would receive EU duty concessions for quotas rising from 250,000 vehicles in Year 1 to 400,000 from Year 10.
India’s in-quota duty on eligible EU cars would fall to 10% by Year 5, while cars below €15,000 would receive no passenger-vehicle concession.
Separate arrangements would cover CKD vehicles, electric and plug-in hybrid cars, with concessions generally beginning or changing from Year 5.
The agreement was finalised in January 2026 but remains unsigned and requires approvals before it could take effect, potentially in 2027.
- Who
- The governments of India and the European Union, along with European and Indian automobile manufacturers and exporters of selected goods.
- What
- A proposed India-EU Free Trade Agreement would reduce tariffs and create quotas for eligible vehicles, agricultural products, processed foods and wine.
- When
- The agreement was finalised in January 2026; the articles say it remains unsigned, may be signed later in 2026 and could take effect in 2027 after approvals.
- Where
- The arrangements would apply to EU vehicles entering India, Indian-origin vehicles entering the EU, and specified goods traded between the two markets.
- Why
- The agreement is intended to provide preferential market access while retaining quotas, price limits, origin conditions and protections for sensitive products.
Potential Benefits
Limits And Concerns
Automotive market access
Potential Benefits
Lower duties could help European manufacturers sell more premium and niche models in India, while Indian automakers would receive larger concessional export quotas in the EU.
Limits And Concerns
Access remains limited by tariff-rate quotas, price bands, technology rules and origin requirements; vehicles outside the quotas continue to face higher duties.
Consumer impact
Potential Benefits
Lower import duties could give Indian buyers access to a wider selection of eligible European vehicles, especially higher-priced models.
Limits And Concerns
Cars below €15,000 are excluded, and the articles do not establish that manufacturers will pass all tariff savings on to consumers, limiting the effect on mass-market vehicles.
Trade-policy precedent
Potential Benefits
Using quotas and phased tariff reductions expands trade while maintaining controls over sensitive sectors instead of immediately removing all protections.
Limits And Concerns
GTRI founder Ajay Srivastava warned that Japan, South Korea and other partners could seek similar concessions, noting that the first-year quota of 100,000 EU cars is nearly six times India’s 17,191 EU-car imports in 2025.
- India’s EU car quota
- Up to 100,000 EU-origin ICE and hybrid passenger cars in Year 1, rising to 160,000 from Year 10
- EU’s Indian car quota
- 250,000 Indian-origin passenger cars in Year 1, rising to 400,000 from Year 10
- India’s duty path
- In-quota duties on eligible EU cars fall to 10% by Year 5; current Indian passenger-vehicle duties cited in the articles range from 66% to 110%
- Price exclusion in India
- EU passenger cars priced below €15,000 receive no preferential concession
- CKD arrangement
- The India quota for eligible completely knocked-down ICE and hybrid vehicles starts at 75,000 units, with duty falling from 13.75% to 8.25% and the quota later declining to 50,000
- EU duty path
- The EU’s preferential duty on eligible Indian ICE and hybrid cars falls from 8% in Year 1 to zero in Year 5
- Agreement status
- Finalised in January 2026 but not yet signed or approved
Sources
India-EU FTA Deal Opens Door For 1 Lakh Car Imports At Lower Tariff In First Year
India-EU FTA to cut car import duties; 1 lakh EU cars eligible in first year - What it means for customers
EU to allow 2.5 lakh Indian cars at concessional duty under FTA; quota to reach 4 lakh in 10 years
