India Cuts Import Tariffs on Luxury European Cars Under New EU Trade Deal
India will sharply reduce import duties on high-end European cars as part of a newly finalised trade agreement with the European Union, significantly opening its tightly protected auto market. Under the deal, tariffs on premium cars will be cut to as low as 30% from current levels that can reach 110%, benefiting luxury carmakers such as BMW and Mercedes-Benz. The agreement was concluded on January 28 and aims to boost bilateral trade amid shifting global trade dynamics.
According to a senior government official, India will immediately lower duties on up to 100,000 imported internal combustion engine vehicles annually, divided into three price categories. Cars priced between 15,000 and 35,000 euros will face a 35% tariff, while vehicles priced above 35,000 euros will attract a reduced duty of 30%, with annual import caps applied. Over time, the combined quota for these categories will rise to 160,000 vehicles over a 10-year period, with tariffs eventually set to decline further to 10%.
The deal is expected to help expand India’s small but growing luxury car market, which currently accounts for less than 1% of total passenger vehicle sales. While immediate price cuts are unlikely, automakers say the move will allow them to introduce a wider range of models. India has also agreed to cut import duties on a limited number of high-priced European electric vehicles after five years, while continuing to protect domestic EV manufacturers such as Tata Motors and Mahindra in the near term.
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