India-EU FTA Boosts Luxury Car Market with Major Import Duty Cuts
DETAILS
Immediate Impact: Luxury Cars Get a Price Break
- Cars priced between €35,000 and €50,000 will now attract a 30% duty, with an annual import cap of 33,000 units.
- Over a period of 10 years, the combined cap for all three price categories will increase to 160,000 units, gradually allowing more European luxury cars to enter India.
Electric Vehicles: Protection for Local Manufacturers
- Import duties on high-end European EVs will be reduced to 30-35%, but only five years after the FTA comes into effect.
- These cuts will apply to EVs priced above €20,000, ensuring that India’s local EV manufacturers retain a competitive edge in the initial years.
- Over time, tariffs for European EVs could drop further to 10%, within the annual import quota, opening doors to premium EV models such as BMW i7, Porsche Taycan, and Volvo EX40.
Quota-Based Market Opening: Balancing Competition and Protection
- A total of 250,000 luxury vehicles per year are allowed under the reduced tariff regime.
- Cars priced below INR 1.64 million (US$17,984.7) remain largely protected to encourage local manufacturing under the Make in India initiative.
- Imports beyond the quota continue to attract existing high duties, balancing market liberalization with domestic industry protection.
India’s Import Trends: Where European Luxury Cars Stand
Germany, Belgium, and Sweden are the largest exporters of petrol luxury cars with engine capacities above 1500cc:
| Country | FY 2024-25 (US$ Million) | FY 2025-26 (April–Nov) |
| Germany | 91.101 | 37.425 |
| Belgium | 76.278 | 49.123 |
| Sweden | 39.21 | 31.909 |
Diesel SUVs and Luxury Vehicles
Germany, the Czech Republic, and Belgium lead imports of diesel luxury SUVs.
| Country | FY 2024-25 (US$ Million) | FY 2025-26* (April–Nov) |
| Germany | 0.163 | 0.072 |
| Czech Republic | 0.041 | 0.00 |
| Belgium | 0.00 | 0.088 |
Electric Luxury Vehicles
Germany dominates EV exports to India, followed by Sweden and Belgium.
| Country | FY 2024-25 (US$ Million) | FY 2025-26* (April–Nov) |
| Germany | 117.98 | 42.128 |
| Sweden | 7.56 | 2.136 |
| Belgium | 0.00 | 0.825 |
Popular European Luxury Models in India
| Brand & Model | Origin | Price in India (INR) |
| Lamborghini Urus | Italy | 41.8–45.7 million |
| Mercedes-Benz GLA | Germany | 4.97–5.27 million |
| Ferrari 812 | Italy | 52 million |
| Maserati MC20 | Italy | 36.9 million |
| Audi RS5 | Germany | 10.7 million |
| BMW i7 (EV) | Germany | 20.5–25.8 million |
| Porsche Taycan (EV) | Germany | 16.7–25.3 million |
| Volvo EX40 (EV) | Belgium | 5.61 million |
| Maserati Levante | Italy | 15 million |
| Ferrari Roma | Italy | 37.6 million |
Strategic Implications for European Automakers
- Opens up the high-end automobile segment to new buyers.
- Encourages local assembly and technology transfer.
- Promotes investment in India’s luxury car ecosystem, including employment generation and supply chain integration.
What It Means for Indian Consumers
- Greater choice in luxury cars and premium EVs.
- Lower prices on imported European vehicles within the quota.
- Opportunity to experience high-performance models that were previously cost-prohibitive.
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