Photos are used for consultant functions solely. |Photograph courtesy: Getty Photos/iStockphoto
India is about to chop tariffs on automobiles imported from the European Union from as much as 110% to 40%, sources mentioned, within the biggest-ever opening of the nation’s huge market as the 2 nations transfer nearer to signing a free commerce settlement that might be concluded as early as Tuesday (27 January 2026).
Prime Minister Narendra Modi’s authorities has agreed to right away reduce taxes on a restricted variety of automobiles from the 27-nation bloc whose import worth exceeds 15,000 euros ($17,739), two individuals briefed on the talks mentioned. Reuters.
This will probably be additional diminished to 10% over time, making it simpler for European automakers resembling Volkswagen, Mercedes-Benz and BMW to entry the Indian market, they added.
The sources declined to be recognized as a result of the talks are confidential and topic to last-minute adjustments. India’s Ministry of Commerce and the European Fee declined to remark.
The settlement has already been referred to as the “mom of all offers”
India and the EU are anticipated to announce the top of long-running negotiations for a free commerce settlement, after which either side will finalize particulars and ratify what’s being referred to as the “mom of all agreements”.
The deal might increase bilateral commerce and enhance exports of Indian merchandise resembling textiles and jewellery, which have been hit by 50% U.S. tariffs since late August. India is the world’s third-largest auto market when it comes to gross sales after the US and China, however the home auto trade has been one of the vital protected. New Delhi presently imposes 70% and 110% tariffs on imported automobiles, ranges usually criticized by Tesla executives together with President Elon Musk.
New Delhi is proposing to right away reduce import duties to 40% on about 200,000 inner combustion engine automobiles a yr, one of many individuals mentioned, in essentially the most aggressive transfer but to open up the sector. This allocation is topic to alter on the final minute, the official added.
Battery electrical automobiles will probably be exempted from import responsibility cuts for the primary 5 years to guard investments within the rising sector by home firms resembling Mahindra & Mahindra and Tata Motors, two individuals aware of the matter mentioned. In 5 years, EVs will probably be topic to comparable tariff cuts.
The present market is dominated by Suzuki and native producers.
Decrease import taxes could be a lift not solely to European automakers resembling Volkswagen, Renault and Stellantis, but in addition to luxurious automotive makers Mercedes-Benz and BMW. Though these firms produce regionally in India, they’re struggling to develop past a sure stage due partially to excessive tariffs.
One of many two sources mentioned the tax break would permit automakers to promote imported automobiles at decrease costs and permit them to check the market with a broader portfolio earlier than committing to constructing extra automobiles regionally.
At present, European automakers have lower than 4% of India’s 4.4 million annual automotive market, which is dominated by Japan’s Suzuki Motors and homegrown manufacturers Mahindra and Tata, which collectively account for two-thirds of the market.
The Indian market is predicted to develop to six million items per yr by 2030, and a few firms are already planning new investments.
Renault is aiming to make a comeback in India with a brand new technique because it appears to develop exterior of Europe, the place Chinese language automakers are more and more making inroads, whereas Volkswagen Group is finalizing its subsequent funding in India by means of its Skoda model.
