India-EU FTA Offers EU Carmakers Initial Tariff Quota Of 1 Lakh Cars Annually, Rising To 1.6 Lakh

New Delhi, Sep 12 (KNN) The India-EU free trade agreement will allow European Union carmakers to export up to 1 lakh passenger vehicles annually to India at concessional import duties initially, with the quota gradually rising to 1.6 lakh vehicles from the 10th year, according to the draft text released on Friday.

The tariff-rate quota (TRQ) covers EU-origin internal combustion engine (ICE) and hybrid electric vehicles (HEVs), with concessions linked to the vehicle's CIF value. The concession will apply only to cars priced at Euro 15,000 (around Rs 16.6 lakh) or above, PTI reported.

For vehicles priced between Euro 15,000 and Euro 35,000, the in-quota duty will fall from 110 per cent to 35 per cent in the first year and 10 per cent by the fifth year. For cars priced above Euro 35,000, the duty will decline from the most-favoured-nation rate of 66 per cent to 30 per cent in the first year and 10 per cent by the fifth year.

The total quota will rise from 1 lakh vehicles in the first year to 1.075 lakh in the second year, 1.15 lakh in the third year, 1.225 lakh in the fourth year and 1.3 lakh in the fifth year, before gradually reaching 1.6 lakh from the 10th year.

From the fifth year, 43,000 units will be reserved for vehicles priced above Euro 50,000 (around Rs 55.4 lakh).

Concessions Also Cover Cars Beyond Quota

India will also reduce tariffs on EU cars imported outside the quota. For vehicles priced between Euro 15,000 and Euro 50,000, the out-of-quota duty will gradually fall to 35 per cent by the 10th year, depending on the applicable base tariff. For cars priced above Euro 50,000, it will fall to 30 per cent.

A separate quota has been offered for completely knocked-down ICE and hybrid cars. It will cover 75,000 units annually for the first five years and gradually decline to 50,000 units from the 10th year. The in-quota duty will fall from 13.75 per cent in the first year to 8.25 per cent from the third year, compared with the current 16.5 per cent.

Concessions for battery-electric vehicles, plug-in hybrids and other eligible technologies will begin in the fifth year and apply only to vehicles priced at Euro 20,000 or more. 

The CBU quota will start at 20,000 vehicles in the fifth year, rise to 50,000 in the 10th year and reach 90,000 from the 14th year. The in-quota duty will decline from 30 per cent in the fifth year to 10 per cent in the 10th year, compared with the listed base duty of 110 per cent.

GTRI Flags Wider Trade Implications

GTRI Founder Ajay Srivastava said the EU had become the second major trade partner after the UK to secure automotive tariff concessions from India under an FTA.

India imported only 17,191 cars from the EU in 2025, while the agreement provides European automakers with a first-year TRQ of 1 lakh CBU ICE and non-plug-in hybrid cars, nearly six times current imports, he said.

Srivastava said the agreement could lead other major trade partners, including Japan and South Korea, to seek similar preferential market access and TRQs.

Beyond automobiles, India has offered tariff-rate quotas and price-based concessions on selected products including wine, other alcoholic beverages, pork, apples, kiwifruit, pears and peaches.

(KNN Bureau)