India-EU FTA could reset import economics for luxury cars, bikes and commercial vehicles
Phased tariff cuts under the proposed India-EU FTA would widen the case for premium-vehicle imports while reshaping localisation and sourcing decisions for Tata Motors, Bajaj Auto, JSW and European auto groups.
What happened
The proposed India-EU FTA would lower tariffs on European vehicles in phases, reshaping sourcing and localisation decisions. Tata Motors, Bajaj Auto and JSW
Key facts
- European cars above €35,000: 30% import duty in Year 1
- CKD kits: 13.75% duty in Year 1
- Year 5 duties: 10% for qualifying imported cars and 8.25% for CKD kits
- EV and plug-in hybrid concessional quota: 20,000 units from Year 5
- European motorcycles above 800cc: duty falls from 55% to 32.5% at implementation and 10% from Year 2
What changed
The proposed India-EU FTA would lower tariffs on European vehicles in phases, reshaping sourcing and localisation decisions. Tata Motors, Bajaj Auto and JSW could benefit through European manufacturing links, while luxury brands gain greater scope to import premium models.
Why this matters
Prepare for a phased shift toward premium EU vehicle imports by recalibrating pricing, dealer assortments and localisation plans as duties potentially fall from 30% to 10% over five years.
What to watch
- Publication of final FTA text, implementation date and Year 1-to-Year 5 duty schedule.
- Annual concessional-import quotas, quota allocation method and penalties for exceeding limits.
- Rules of origin, minimum European value-add requirements and treatment of UK-origin content.
- Definition and qualification process for the €35,000 vehicle threshold.
- CKD/SKD classification rules and whether battery packs, motors and key modules receive separate treatment.