By Mohammed Mudassir
New Delhi / Srinagar- India is poised to make a major policy shift in its automobile sector by slashing import tariffs on cars from the European Union (EU) to 40% from as high as 110%, a move that comes
The imported cars targeted under this proposal are those with a value above €15,000 (approximately ₹16.3 lakh). The tariff reduction is significant because it marks one of the largest openings of India’s traditionally protected auto market, a sector that has long imposed steep duties to protect domestic manufacturers. Experts call this potential deal the “mother of all deals” for the automotive industry.
Why This Matters for Indian Buyers
Lower tariff rates would make European vehicles cheaper in India, including brands like Volkswagen, Mercedes-Benz, BMW, Renault, and others that have struggled to expand due to high import taxes. Under the current regime, imported cars face duties ranging from 70% to 110% — one of the highest in the world. Reducing this to 40% — with further phased cuts possibly bringing it down to 10% in the future — could significantly lower the on-road costs for many luxury and premium cars.
For Indian consumers, especially in markets like Srinagar, this change could open up new opportunities to own high-end European vehicles at prices more comparable to locally manufactured models. With a growing middle class and rising demand for premium vehicles, many buyers could see European cars become more attainable, leading to a more competitive and diverse auto market.
Local Market Impact and Domestic Players
Despite the expected tariff cuts, battery electric vehicles (EVs) will initially be excluded from these reductions for up to five years to protect domestic EV investments by companies such as Tata Motors and Mahindra & Mahindra. After this period, EVs are expected to follow similar tariff reduction timelines.
Currently, the Indian car market is dominated by Japanese and domestic brands, with Maruti Suzuki alone commanding the largest share, followed by local manufacturers like Tata Motors and Mahindra & Mahindra. Together, these companies account for nearly two-thirds of annual car sales in India, while European brands hold less than 4 % of the market due to past tariff barriers.
The tariff reduction is expected to encourage more European manufacturers to bring a wider range of models to India. While some brands already produce vehicles locally through partnerships or assembly operations, a lower duty regime could stimulate new investment in local production or complete knocked-down (CKD) units, making even more models cost-competitive.
What This Could Mean for the Future
Industry analysts believe that slashing tariffs will not only benefit buyers in terms of more options and potentially lower prices but also help position India as a more attractive market for global automakers. With the Indian car market projected to reach around 6 million units annually by 2030, the lowered duties may bolster long-term investment and expand choice for consumers across segments.
While final details still depend on the formal ratification of the trade deal, the proposed tariff cut is already being viewed as a transformative step toward liberalizing India’s auto sector — one that could reshape industry dynamics and give Indian consumers access to a broader palette of international automotive technology at more accessible prices.
