The India-EU Free Commerce Settlement (FTA), as soon as signed and carried out, will enable European carmakers to import 1 lakh utterly built-up (CBU) internal-combustion engine (ICE) and non-plug-in hybrid vehicles into India at concessional import duties within the first 12 months, in keeping with the tariff schedule beneath the deal. The quota will steadily rise to 1.6 lakh automobiles from the tenth 12 months.
The negotiations concluded in January 2026. The settlement is but to be signed and would require completion of the respective inner procedures earlier than it could enter into drive. It’s anticipated to be signed by the top of this 12 months and will come into impact from 2027.
- First-year quota covers 1 lakh CBU vehicles
- Import responsibility inside quota begins at 30 p.c
- Quota rises to 1.6 lakh vehicles from tenth 12 months
Decrease duties for imported vehicles
Within the first 12 months, ICE and non-plug-in hybrid vehicles priced between 15,000 euros and 35,000 euros will appeal to a 35 p.c import responsibility inside the quota. Automobiles priced between 35,000 euros and 50,000 euros, in addition to these above 50,000 euros, will appeal to a 30 p.c responsibility. Automobiles priced under 15,000 euros is not going to obtain a tariff concession within the first 12 months.
The 1 lakh-unit quota can be divided throughout three worth bands, with 34,000 models allotted to vehicles priced between 15,000 euros and 35,000 euros, and 33,000 models every for the 35,000-50,000 euro and above-50,000 euro classes.
The quota will improve to 1.075 lakh automobiles within the second 12 months, 1.3 lakh within the fifth 12 months and 1.6 lakh from the tenth 12 months. The preferential responsibility throughout all three worth bands can be 10 p.c from the tenth 12 months.
EVs and plug-in hybrids get separate quota
Pure electrical and plug-in hybrid vehicles is not going to obtain concessional entry beneath this preliminary quota. Their preferential entry will start from the fifth 12 months for automobiles priced above 20,000 euros.
A separate quota for battery-electric and plug-in hybrid CBUs will begin at 20,000 automobiles within the fifth 12 months and improve to 90,000 automobiles by the 14th 12 months. The preferential responsibility can be 30 p.c within the fifth 12 months and can fall to 10 p.c from the tenth 12 months.
Automobiles imported outdoors the quota will proceed to draw greater duties, starting from 66-110 p.c initially. These charges are scheduled to fall to 30-35 p.c by the tenth 12 months.
European carmakers might broaden CBU imports
The decrease duties might make it extra viable for European producers akin to Volkswagen, Mercedes-Benz and BMW to carry extra CBUs from Europe. The deal might significantly assist them introduce a wider vary of area of interest, efficiency and high-end fashions which can be at the moment much less viable to import at greater duties.
The FTA additionally gives reciprocal concessions for vehicles exported from India to the EU.