Updated:
January 28, 2026 22:37
Image Source: Bharat Tech
India will immediately reduce duties on up to 100,000 European cars a year to 30–35% from rates as high as 110%, with tariffs on mid-range cars set at 35% and luxury models at 30%. Tariffs will fall to 10% over five years and annual quotas rise to 160,000 over ten years.
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India and the European Union have finalised a trade arrangement that significantly eases import barriers for European automakers, aiming to boost bilateral trade and give consumers greater access to premium and electric vehicles. The move is expected to reshape market dynamics for brands such as BMW, Mercedes-Benz and other EU manufacturers while prompting strategic responses from domestic producers and policymakers.
Key Highlights:
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India will immediately cut tariffs on 100,000 European cars per year to 30–35%, down from rates that reached 110% in some categories.
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Tariffs on cars priced between €15,000 and €35,000 will be set at 35%; cars priced above €35,000 will face a 30% duty.
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The tariff schedule will be progressively reduced to 10% over five years, creating a predictable glide path for import costs.
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Annual import quota will be increased to 160,000 vehicles over ten years, expanding the volume of cars that can enter under the lower-duty regime.
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Electric vehicle models priced above €20,000 will receive the same phased import tax reductions after five years, aligning EV policy with broader automotive liberalisation.
Market And Policy Implications:
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The immediate cuts will likely lower retail prices for imported European models, intensify competition in the premium segment, and accelerate EV adoption where price parity improves.
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Domestic manufacturers may face pressure to accelerate localization, adjust pricing strategies, or seek tariff protections for specific segments.
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The phased quota and glide path aim to balance market opening with time for local industry adaptation and investment.
Sources: Reuters, Deccan Herald, Global Banking and Finance Review
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