Import Duty On Cars Likely To Be Slashed To 40% Under India-EU FTA: Report

In what could be a big boost for buyers eyeing a premium or luxury vehicle from Europe, the upcoming India-European Union Free Trade Agreement (FTA) is expected to reduce import duties on cars. As per a Reuters report, the FTA could slash import duties on vehicles from as high as 110 per cent to 40 per cent, which could have a significant impact on pricing.

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The report states that the revised import duties are expected to apply to all vehicles valued at over 15,000 euros, or about Rs 16 lakh (approx). The reduced duty, however, is said to be subject to an annual cap of 2 lakh units. Furthermore, there could be a provision to reduce the duty to as low as 10 per cent over the ensuing years.

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Models affected by the reduction in import duty are expected to include the likes of the VW Golf GTI and Skoda Octavia RS, up to models from Mercedes-Maybach, Ferrari and Lamborghini. However, the reduced duty is not expected to apply to electric vehicles for the initial five years, a move likely to offer an advantage to local players.

The final details of the FTA are, however, yet to be confirmed, with the FTA expected to be announced on Tuesday, January 27, 2026.