India Slashes EU Car Import Tariffs, Top Rate Cut from 110% to 40%

India and the European Union have made significant progress in their free trade agreement (FTA) negotiations, with plans to announce an agreement nearing completion on January 27. A key element of the deal involves India immediately slashing tariffs on approximately 200,000 internal combustion engine vehicles imported annually from the EU’s 27 member states, valued at over €15,000 per unit, from a peak rate of 110% down to 40%, with potential further reductions to 10% in the future. This move is seen as one of India’s most aggressive market-opening measures to date. Currently the world’s third-largest automotive market, India sells around 4.4 million vehicles annually, yet European brands hold less than a 4% market share—primarily due to high tariff barriers. The proposed tariff cuts are expected to lower entry costs for European automakers and could accelerate their efforts to localize production in India. Final quota details may still be subject to adjustment.