India-EU FTA Could Cut Auto Duties, Boost Luxury EVs in India
India-EU FTA Could Cut Auto Duties, Boost Luxury EVs in India
The India-EU FTA is poised to cut auto import duties to 10-15%, potentially boosting European luxury EVs in India while protecting domestic manufacturers.
The proposed free trade agreement between India and the European Union is moving toward slashing import duties on automobiles, including electric vehicles, to about 10-15%. This shift could open the Indian market to European luxury EVs at more competitive prices and may spur a surge in sales, according to industry observers.
Currently, European cars above a landed cost of around $40,000 face an import duty near 100%, a levy that has kept many luxury EVs out of reach for many buyers in India. A reduced duty under the FTA would bring European luxury models closer to price parity with locally assembled or regionally sourced options, potentially expanding consumer choice while sharpening competition for domestic players.
Even as prices could drop for consumers, the agreement is expected to balance market access with protections for homegrown manufacturers such as Tata Motors and Mahindra & Mahindra. Phased localisation requirements and value-addition norms for EV makers are likely to continue, ensuring that increased imports do not derail India’s long-term manufacturing goals.
Premium European manufacturers are also anticipated to benefit from new rules on digital value addition, battery passports, and software-led manufacturing, aligning with broader trends in vehicle tech and supply chain transparency. Mercedes-Benz India has noted that many of its India-sold vehicles are locally produced, suggesting that any import duty cuts could translate into meaningful price relief while preserving India’s role as an export hub for Mercedes-Benz to the EU and global markets.
The deal is expected to be announced at the bilateral summit on January 27, underscoring India’s ambition to position itself as a manufacturing hub for luxury EVs and a more integrated partner in Europe’s automotive supply chain.
