India is preparing to significantly cut import tariffs on cars from the European Union as part of an upcoming free trade agreement, according to sources familiar with the talks.
Under the plan, tariffs on EU-made cars would drop to 40% from current levels as high as 110%, with duties gradually falling to 10% over time. The initial cuts would apply to a limited number of vehicles priced above €15,000, giving European automakers improved access to one of the world’s largest car markets.
The move is expected to be announced alongside the conclusion of long-running India–EU trade negotiations, a deal officials have described as the “mother of all deals.” The agreement could also boost Indian exports such as textiles and jewellery, which have recently been hit by high US tariffs.
India, the world’s third-largest car market, has long protected its domestic auto industry with steep import duties. The proposed changes would mark the country’s most aggressive opening of the sector to date, benefiting brands including Volkswagen, Mercedes-Benz, and BMW.
Electric vehicles will initially be excluded from the tariff cuts for five years to protect domestic manufacturers, after which EVs would follow a similar reduction path.