India-EU trade talks: report says India may cut import tariff on select EU cars to 40% from up to 110%
India is reportedly preparing a major tariff opening for European cars as part of a trade deal with the EU, with duties on select vehicles said to fall to 40% from levels as high as 110%. Sources told Reuters the change would apply to limited volumes above a price threshold, with further reductions over time.
India is planning to sharply reduce import duties on certain cars from the European Union to 40% from rates as high as 110%, according to sources cited in a Reuters report carried on Sunday, January 25, 2026. The move is being described as the biggest opening yet for India’s protected auto market as New Delhi and Brussels push toward a free trade agreement.
The reported arrangement would apply to a limited number of EU-built cars that meet an import price threshold, with the tariff cut said to be immediate. Over time, the duty could be reduced further, potentially reaching 10% in later phases, the sources said. The structure indicates an attempt to balance market access demands with domestic industry protection.
If implemented, the tariff cuts could reshape pricing for premium European brands and change the economics of importing models that are currently expensive largely due to high duties. For global automakers, India remains a huge growth market but one where import barriers and localisation requirements have historically forced companies to manufacture locally or keep volumes limited.
The wider India-EU trade discussions cover more than automobiles, spanning goods, services, and strategic sectors. But cars and electric vehicles have been one of the most sensitive chapters, because India’s government also wants to protect investments already made by local manufacturers and global firms producing inside the country.
The immediate business question will be the fine print: which vehicle categories qualify, what volume caps apply, what localisation or compliance rules are attached, and how quickly further tariff steps would be triggered. For consumers, any price impact would depend on the eligible models and the way manufacturers pass on duty reductions.