Owning a European luxury car in India may soon become significantly more affordable. Premium brands such as Mercedes-Benz, BMW, Audi, Porsche, Lamborghini, Ferrari, Rolls-Royce and Bentley are expected to see price reductions after India and the European Union concluded a long-awaited Free Trade Agreement (FTA), paving the way for steep cuts in import duties on fully built cars.
The breakthrough agreement, finalised at the 16th India-EU Summit, marks a major shift in India’s automobile trade policy and is poised to reshape the premium car market over the next few years.
A Big Shift in Import Duties
Under the terms of the agreement, India has agreed to a phased, quota-based reduction in import tariffs on European cars. Currently, fully built imported vehicles attract duties that can go as high as 110 per cent, making luxury cars prohibitively expensive for many buyers.
Once the FTA comes into force—likely from early next year—tariffs on European cars imported within a fixed annual quota will be reduced in stages. Industry sources indicate that duties may first be brought down to around 40 per cent, before being gradually lowered to as little as 10 per cent over time.
The concessional rates are expected to apply to up to 250,000 cars imported annually from the European Union, giving European manufacturers a substantial window to expand their presence in India.
What This Means for Indian Car Buyers
For Indian consumers, especially buyers in the premium and ultra-luxury segments, the impact could be substantial. Lower import duties will reduce the overall cost of completely built units (CBUs), allowing brands to offer more competitive pricing on flagship models that are currently priced far above their global counterparts.
Cars that could become more accessible include:
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High-end sedans and SUVs from Mercedes-Benz, BMW and Audi
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Performance and sports cars from Porsche and Ferrari
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Ultra-luxury offerings from Rolls-Royce, Bentley and Lamborghini
While exact price reductions will depend on how manufacturers pass on the benefits, analysts expect noticeable cuts once the lower tariff slabs are implemented.
Boost for European Carmakers
The FTA offers European automakers a strategic advantage in one of the world’s fastest-growing automobile markets. With rising incomes, a young buyer base, and increasing appetite for premium mobility, India represents a major growth opportunity.
Lower duties will allow carmakers to:
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Introduce a wider range of imported models
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Test demand for niche and performance vehicles
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Strengthen brand positioning in the luxury segment
The agreement may also encourage manufacturers to balance imports with increased local investment, including assembly units, technology partnerships, and electric vehicle development.
Balancing Protection and Liberalisation
India’s decision to adopt a quota-based liberalisation model reflects a careful balancing act. While opening the market to high-end imports, the government continues to protect domestic automobile manufacturing by limiting the volume of concessional imports.
By restricting tariff cuts to a fixed number of vehicles each year, India aims to prevent a sudden surge of imports while still signalling openness to global trade and investment.
Part of a Larger Trade Reset
The automobile concessions are part of a much broader India-EU trade pact that covers goods, services, investment, and regulatory cooperation. Together, India and the EU account for nearly a quarter of global GDP and about one-third of world trade, making this one of the most significant trade agreements for both sides.
Beyond cars, the FTA is expected to deepen cooperation across sectors such as manufacturing, green technologies, digital services, and clean energy.
Looking Ahead
For Indian car buyers, the India-EU FTA could mark the beginning of a new era—one where global luxury vehicles are no longer priced far out of reach. While the full impact will unfold gradually as tariff reductions are phased in, the direction is clear: premium European cars are set to become more accessible than ever before.
As trade barriers come down and competition intensifies, the Indian luxury automobile market is poised for a transformation—driven by choice, competitiveness, and global integration.