India is considering sharp reductions in car import duties under a proposed trade deal with the European Union, Reuters reported.
Citing sources familiar with the matter, the report said New Delhi intends to reduce tariffs on select European vehicles to 40%, down from current rates that reach as high as 110%, once the agreement is finalised and announced.
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A smaller group of cars priced above €15,000 (Rs1.63m) would see immediate relief, with duties eventually falling to 10%.
The move would open the door wider for manufacturers such as Volkswagen, Mercedes-Benz and BMW.
Officials involved in the discussions told Reuters that the changes could support bilateral commerce and help Indian exporters of products including textiles and jewellery, which have faced 50% US tariffs since late August.
India, described as the world’s “third-largest” car market after the US and China, currently imposes duties of 70% to 110% on imported vehicles.
One source said the government has suggested allowing around 200,000 petrol and diesel cars a year to enter at the reduced 40% rate, although that figure remains subject to revision.
Battery electric vehicles (BEVs) would not benefit from the lower tariffs for five years, reflecting efforts to shield domestic investors such as Mahindra & Mahindra and Tata Motors.
After that period, EVs would face comparable reductions.
European brands account for less than 4% of India’s 4.4-million-unit passenger car market, which is dominated by Suzuki Motor alongside Mahindra and Tata, holding roughly two-thirds combined.
With annual sales projected to climb to six million by 2030, companies including Renault and Volkswagen Group is preparing fresh investment plans through their Indian operations.
