European Cars to Get Cheaper in India as Import Tariffs Drop from 110% to 40%

India has been preparing to significantly cut import tariffs on cars from the European Union as part of a long-awaited free trade agreement, which could be announced as early as Tuesday, as per the sources cited by Reuters.

Under the deal, New Delhi plans to reduce the peak import duties on EU-made cars to 40%, down from the current levels of up to 110 percent, marking the most substantial opening of India’s heavily protected automobile market.

The initial tariff cut would apply to a limited number of fully built cars priced above 15,000 euros, which is around Rs. 16.3 lakh. These duties are expected to be lowered to as little as 10 per cent, easing access to the Indian market for European automakers such as Volkswagen, BMW, and Mercedes-Benz.

As per the sources, India has agreed to immediately lower duties on around 200,000 internal combustion engine vehicles, although the final quota could still change. The battery vehicles will be excluded with the duty reductions for the first five years for protecting the investments by the domestic manufacturer, with similar cuts.

India, as well as the EU, are expected to announce the conclusion of negotiations for the comprehensive free trade pact, ending years of stalled talks. Although the announcement would mark a major milestone, the agreement will still require finalisation and ratification by both sides.