European carmakers will get a significantly wider opening to India’s passenger vehicle market under the proposed India-EU free trade agreement, with the draft pact released on Friday providing for concessional import duties on up to 1 lakh cars in the first year. The quota will gradually rise to 1.6 lakh vehicles from the 10th year of implementation.The draft text provides tariff-rate quotas (TRQs) for EU-origin internal-combustion engine (ICE) and hybrid electric vehicles (HEVs), with the concessional duty linked to the vehicle’s CIF value. The agreement is expected to be signed by the end of this year and could come into force next year, reported PTI.
What changes for EU cars
The concessions will apply only to passenger vehicles priced at Euro 15,000 (around Rs 16.6 lakh) or more. Cars below that threshold will continue to face the existing tariff.For vehicles priced between Euro 15,000 and Euro 35,000 (around Rs 16.6 lakh to Rs 38.8 lakh), the in-quota duty will fall from 110 per cent to 35 per cent in the first year and then to 10 per cent by the fifth year.For cars priced above Euro 35,000, the duty will fall from the existing most-favoured-nation tariff of 66 per cent to 30 per cent in the first year and eventually to 10 per cent.The overall quota for ICE and hybrid passenger cars will rise from 1 lakh units in the first year to 1.07 lakh in the second year, 1.15 lakh in the third, 1.225 lakh in the fourth and 1.3 lakh in the fifth year. It will then increase progressively to 1.6 lakh vehicles from the 10th year.From the fifth year, 43,000 vehicles will be reserved for cars priced above Euro 50,000 (around Rs 55.4 lakh).India will also gradually lower tariffs on EU cars imported outside the quota. For cars priced between Euro 15,000 and Euro 50,000, the out-of-quota duty will eventually fall to 35 per cent by the 10th year, while the duty on cars priced above Euro 50,000 will fall to 30 per cent.The pact also provides a separate quota for completely knocked-down ICE and hybrid vehicles. The quota will stand at 75,000 units annually for the first five years before gradually declining to 50,000 units from the 10th year. The in-quota duty will fall from 13.75 per cent in the first year to 8.25 per cent from the third year, against the current 16.5 per cent.
EVs, wine and farm products
Concessions for battery-electric vehicles, plug-in hybrids and other eligible technologies will begin from the fifth year. They will apply only to vehicles priced at Euro 20,000 (around Rs 22 lakh) or more.The CBU quota for these vehicles will start at 20,000 units in the fifth year, rise to 50,000 in the 10th year and reach 90,000 from the 14th year onwards. The in-quota duty will fall from 30 per cent in the fifth year to 10 per cent in the 10th year, compared with the listed base duty of 110 per cent. Vehicles below the Euro 20,000 price threshold will not receive the concession.The draft pact also offers tariff concessions on selected EU agricultural and food products, including wine, pork, apples, kiwifruit, pears and peaches, largely through quotas and price-based conditions.For wine, products valued below Euro 2.50 per 750 ml will receive no concession and will continue to face the 150 per cent base customs duty. Wine priced between Euro 2.50 and Euro 10 will see the duty fall to 75 per cent in the first year and to 30 per cent from the eighth year. For wine priced at Euro 10 or more, the duty will progressively fall to 20 per cent from the eighth year.India will also allow 2,000 metric tonnes of EU pork annually at concessional rates, while the quota for apples will start at 50,000 tonnes and rise to 1 lakh tonnes from the 11th year, subject to a minimum CIF price of Rs 80 per kg.The first-year quota for kiwifruit will be 12,000 tonnes, rising to 15,000 tonnes from the 11th year. Pears will have a fixed annual quota of 2,250 tonnes, while the quota for peaches will be limited to 20 tonnes a year.
GTRI flags wider implications
The concessions mark a significant opening of some of India’s sensitive markets under the proposed FTA.GTRI founder Ajay Srivastava said the EU had become the second major trade partner after the UK to secure automotive tariff concessions from India under an FTA.“Having established these precedents, India should soon receive similar demands for preferential market access and generous TRQs from other key trade partners such as Japan and South Korea,” he said.Srivastava noted that India imported only 17,191 cars from the EU in 2025, while the agreement provides European automakers with a first-year quota of 1 lakh completely built-up ICE and non-plug-in hybrid cars.“That is almost six times current imports,” he said.He said India had opened parts of several sensitive markets through tariff-rate quotas and price-based concessions rather than unrestricted tariff cuts.“These commitments cover automobiles, wine and selected alcoholic products, pork, apples, kiwifruit, pears and peaches. Imports meeting the prescribed origin, price and quantity conditions will enter at lower duties, while most imports outside these limits will continue to face the normal tariff,” he said.
