BMW, Mercedes, Lamborghini cars to get cheaper as India-EU FTA cuts duties to 10%

Indian consumers planning to buy premium European cars such as BMWs, Mercedes-Benzes and Lamborghinis could see prices ease in the coming years after India and the European Union concluded a long-awaited free trade agreement on Tuesday.

Under the pact, India will gradually slash import duties on European cars from as high as 110% to as low as 10% for a limited number of vehicles, while fully abolishing tariffs on car parts over five to ten years, the European Commission said in a statement.

The agreement, expected to come into force from early next year, will allow duty concessions for up to 2,50,000 European cars annually under a quota system.

The commerce ministry said only cars priced above 15,000 euros would qualify for tariff reductions.

Cars sold below ₹25 lakh, which include petrol, diesel, and hybrid models, are seen as the most important market for Indian manufacturers.

“On automobiles, calibrated and carefully crafted quota based auto liberalisation package will not only allow EU auto makers to introduce their models in India in higher price bands but also open the possibilities for Make in India and exports from India in future,” the commerce ministry said in a statement.

India protects its auto industry strongly, as the sector is growing at a faster pace and is a major employment creator. It is one of the core areas in the ‘Make in India’ initiative of the government.

"The EU has got a very well laid out auto industry, one of the most advanced auto industries, and their cars are one of the best, and it is a reality," PTI quoted an unnamed official as saying.

"Taking note of sensitivity on both sides, we have agreed to a quota-based ecosystem, wherein we are trying to take care of each other’s sensitivities," the official added.

At present, India levies customs duties of up to 110% on fully built-up passenger vehicles costing over $40,000, and 70% on cars priced below that.

Italian supercar maker Lamborghini, which imports all its models into India and sells vehicles starting at around ₹3.8 crore, is among those likely to benefit.

The agreement also includes reciprocal access, allowing Indian-made vehicles to enter the EU market with full duty-free access.