India-EU FTA Cuts Car Tariffs, Raises Export Quotas
From European Commission / EU institutions · Official. Numbers as printed in the document.
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The European Union and India concluded negotiations for a Free Trade Agreement on 27 January 2026. The agreement eliminates or reduces tariffs on over 96% of EU goods exports, and the EU estimates it will save around €4 billion every year in duties on European products. The EU is India's largest trading partner, accounting for €120 billion worth of trade in goods in 2024, or 11.5% of total Indian trade, while India is the EU's 9th largest trading partner, accounting for 2.4% of the EU's total trade in goods in 2024.
Trade in services between the two sides reached €59.7 billion in 2023, up from €30.4 billion in 2020. Business Standard and The Hindu BusinessLine reported that the concessional duty on Indian-made passenger vehicles will be reduced to 6 per cent in the second year of implementation, then to 4 per cent in the third year, 2 per cent in Year 4, and zero from Year 5. The same outlets reported that in-quota duties for European ICE and non-plug-in hybrid cars will fall to 10 per cent by Year 5, while the EU tariff on Indian-origin ICE and hybrid cars will fall to zero by Year 5.
Business Standard and The Hindu BusinessLine reported that European carmakers will get concessional access to the Indian market for up to 100,000 internal combustion engine and hybrid cars in the first year of the agreement, and that there are no quota-based concessions for cars priced above Euro 50,000. Reports differ on whether the duty on cars priced above Euro 50,000 will come down to zero per cent in Year 10 from 8 per cent in the first year, a claim sourced only to The Hindu BusinessLine. The outlets also reported that European-built battery EVs and plug-in hybrids will get no preferential import quota during the first four years of the pact, after which a 20,000-unit concessional import window opens in Year 5.
For battery EV, plug-in hybrid and other technology passenger vehicles priced up to Euro 40,000 CIF, Business Standard and The Hindu BusinessLine reported the tariff-rate quota will start in Year 5 with 27,500 vehicles at 8 per cent import duty, rising to 60,500 in Year 9 and then to 1,25,000 from Year 14 onwards, with the duty removed from the ninth year of implementation. Separately, Maruti Suzuki exported a record 447,000 vehicles in FY26, according to Business Standard and company releases.
Reported in coverage, but we could not match these to a source document. They are not part of the story above.
- India imported 17,191 cars from the EU in 2025.
- India has kept ICE and hybrid cars priced below 15,000 euros outside the concessions.
- The FTA contains a separate concession for completely knocked down imports with a quota of 75,000 vehicles annually during the first five years.