Car import duties in India are set to fall sharply to 10% under an annual quota framework proposed in the India–European Union free trade agreement, marking a major shift in the country’s auto trade policy. At present, fully built imported cars attract duties of up to 110%, a level aimed at protecting domestic manufacturing. The proposed cut is expected to apply only to a limited number of vehicles imported each year under the quota system.
The move is aimed at giving European carmakers improved access to the Indian market while allowing India to retain safeguards for its domestic automobile industry. Premium and luxury car segments are expected to benefit the most, as lower duties could significantly reduce prices of EU-made vehicles in India, improving demand and market penetration.
Industry experts say the annual quota mechanism is designed to balance trade liberalisation with domestic interests. While European manufacturers have long pushed for lower tariffs, Indian policymakers have been cautious due to concerns over potential impact on local production and employment. The quota-based approach is seen as a compromise that limits volume exposure while signalling greater openness under the broader trade pact.
The tariff cut is part of wider negotiations under the India–EU FTA, which also covers goods, services, investment and regulatory cooperation. Analysts note that the final impact will depend on the size of the quota, rules of origin and timelines for implementation, all of which are still under discussion.