India

India to Slash EU Car Import Tariffs in Major Trade Deal

Does India's tariff cut open markets and counter U.S. trade wars or does it threaten domestic industry and farmers?

JAN 26·Updated JAN 28

India to Slash EU Car Import Tariffs in Major Trade Deal

Story

Above: New cars from Volkswagen stand ready for shipping at the Emden plant in Germany as of May 20, 2025. Image credit: Ina Fassbender/AFP/Getty Images

The Facts

India plans to reduce import tariffs on cars from the European Union to 40% from current levels as high as 110%, with further reductions to 10% over time. The tariff cuts will apply to a limited number of vehicles priced above €15,000 ($17,829).
Reuters
Kuwait Times
India and the EU are expected to announce the conclusion of free trade agreement negotiations on Tuesday. The agreement could expand bilateral trade and support Indian exports of textiles and jewelry.
CNBC
Firstpost
Battery electric vehicles will be excluded from import duty reductions for the first five years to protect investments by domestic manufacturers like Mahindra & Mahindra and Tata Motors. After five years, EVs will follow similar duty cuts as combustion engine vehicles.
Business Standard
The Economic Times
India currently levies tariffs of 70% and 110% on imported cars, making it one of the most protected major auto markets globally. New Delhi has proposed slashing import duties to 40% immediately for about 200,000 combustion engine cars annually.
Hindustan Times
India Today
European carmakers currently hold less than 4% share of India's 4.4 million units per year car market, which is dominated by Japan's Suzuki Motor and homegrown brands Mahindra and Tata. The Indian market is expected to grow to 6 million units annually by 2030.
Autocar
The Business Times
Bilateral trade in goods between India and the EU reached €120 billion ($144 billion) in 2024, with the EU being one of India's largest trading partners. The trade deal aims to create a market of nearly 2 billion people accounting for approximately a quarter of global gross domestic product (GDP).
Dw.Com
The Diplomat

Sources Split

LEFT

CENTER

RIGHT

ESTAB
CRIT

CENTER

PRO
ESTAB

The Spin

Narrative A

Slashing car import tariffs from 110% to 40% represents India's most aggressive market opening yet and delivers massive wins for European automakers while protecting domestic EV manufacturers for five years. The move strengthens bilateral trade worth $136.5 billion and helps offset devastating 50% U.S. tariffs that have hammered Indian textile and jewellery exporters since August.

India Today

OG on X

Narrative B

Cutting tariffs to benefit foreign luxury carmakers threatens India's protected domestic auto industry that employs millions and risks flooding the market with European imports before local manufacturers can compete. The deal forces India to sacrifice agricultural protections and accept punitive EU carbon levies while European farmers get shielded from Indian rice imports.