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India-EU Trade Deal: Big Price Cuts Likely For European Cars
The India-Europe trade deal is nearing its final stages, and reports indicate that import tariffs on cars brought in from European Union countries could be significantly reduced. If implemented, this move is expected to lower the prices of automobiles imported via the CBU route, making European models more affordable for Indian buyers.
European Car Prices To Get Slashed
According to a Moneycontrol report, the Government of India is planning to finalise the long-pending trade agreement with the European Union. If the deal goes through, cars from brands such as Volkswagen, Skoda, BMW, and Mercedes-Benz could see a substantial price reduction, making them more affordable than before.
Currently, import tariffs on fully built cars stand at around 110 per cent. Under the proposed trade deal, these duties are expected to be reduced to 40 per cent initially, with a further reduction to as low as 10 per cent over time. This could allow Indian consumers to access European cars at much lower prices. The cost of spare parts and servicing is also expected to come down as a result of this agreement.
Presently, over 2 lakh ICE vehicles are imported from Europe each year. With lower tariffs, these numbers could rise further. However, EVs have reportedly been excluded from the deal for the first five years to protect domestic manufacturers and local suppliers.
India is currently the world's third-largest car market, after the United States and China. With its massive growth potential, several global markets are closely watching India, and the European Union has been keen on finalising this trade agreement to strengthen its presence here.
One of the key reasons India imposes high import duties on foreign cars is to protect domestic brands and encourage global manufacturers to set up local production facilities. This approach helps develop local supply chains and generate employment opportunities.
European brands such as BMW, Mercedes-Benz, Volkswagen, Audi, Porsche, Jaguar, and Land Rover currently import several of their models into India. The proposed trade deal is expected to boost both Indian and European exports, leading to mutual growth and long-term economic cooperation.
Earlier, in June 2025, UK Prime Minister Keir Starmer signed a Comprehensive Economic and Trade Agreement (CETA) with the Indian government. Under this agreement, tariffs on 99 per cent of Indian exports to the UK and around 80 per cent of UK exports to India were eliminated, setting a precedent for similar trade partnerships.
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