Big Relief for Car Buyers: Import Duty May Drop to 10%

India-EU Trade Deal: After 18 long years of waiting, a major agreement has finally been sealed between India and the European Union (EU). At the 16th India-EU Summit, leaders from both sides announced the Free Trade Agreement (FTA). According to news agency PTI, this deal could come into effect from 2027.The biggest highlight for car buyers? Import duty on European luxury cars like BMW, Mercedes-Benz, and Volkswagen may drop sharply, from 110% to just 10%. If you’re planning to buy a luxury car, this is definitely good news. Let’s understand how.

The biggest benefit of the India-EU Trade Deal is expected to go to European automobile companies. Reports suggest that the import tax on cars coming to India from Europe will be reduced from 110% to only 10%. Currently, completely imported luxury cars attract duties ranging from 70% to 110%, which makes their prices in India two to three times higher than their original cost. With the new deal, cars imported from the EU may attract only 10% duty, leading to a 50–70% reduction in prices. This could make luxury cars much more affordable for Indian buyers. For example, if a BMW or Mercedes car has an import value of ₹20 lakh, earlier its price after duties could go up to ₹40–50 lakh. After the duty cut, the same car could be available at around ₹22–25 lakh.

The India-EU Trade Deal is expected to benefit luxury brands such as BMW, Mercedes-Benz, Volkswagen, Audi, and Porsche the most. With a 10% import duty, cars like:

The India-EU FTA is being seen as a game-changer for the Indian automobile industry. On the one hand, customers will benefit from luxury cars becoming available at much lower prices. On the other hand, domestic manufacturers and companies focusing on local manufacturing may face increased competitive pressure, especially in the premium and luxury segments.

Even after the India-EU FTA, the import duty cut on electric vehicles (EVs) is likely to remain limited for the first few years. This is mainly to protect Indian EV manufacturers such as Tata Motors and Mahindra.

In the long run, import duty on EVs could also be reduced to 10%, which may allow European EV brands to enter the Indian market. However, there is no clear or official confirmation on this yet, and more details are expected in the coming years.

The India-EU Trade Deal could turn out to be a major relief for Indian customers, especially middle-class buyers. If import duty is reduced from 110% to 10%, luxury cars from brands like BMW, Mercedes-Benz, and Volkswagen could become significantly more affordable in India.