India-EU FTA to Cut Car Tariffs, Set Import Quotas Across ICE and EV Segments

India will allow preferential import duties on 100,000 internal combustion engine (ICE) cars in the first year of its proposed free trade agreement (FTA) with the European Union, according to media reports. The quota will be divided across three price categories: 34,000 vehicles priced between €15,000 and €35,000, 33,000 units in the €35,000–€50,000 bracket, and another 33,000 vehicles priced above €50,000.

Expansion of Quotas and Duty Reductions

The ICE vehicle import quota will increase progressively, reaching 160,000 units by the 10th year of the agreement. Import duties on these vehicles are expected to fall to 10% by the 5th year, improving theaffordability of European models for Indian consumers.

Tariff concessions for electric vehicles (EVs) will begin only from the 5th year of the FTA. Proposed duty rates will depend on vehicle prices: 35% for EVs priced between €20,000 and €40,000, and 30% for vehicles priced between €40,000 and €60,000, as well as those above €60,000, as per news reports.

EV Import Quotas Over Time

While the full quota roadmap for EVs has not been disclosed, imports eligible for tariff concessions in the first applicable year will be capped at 20,000 units. This limit is expected to rise gradually to 90,000 units by the 14th year of the agreement. Import duties on EVs are projected to decline further to 10% after an additional 5 years.

Overall Annual Vehicle Quota

Across all vehicle categories, ICE, electric, and hybrid, tariff concessions will be subject to a combined annual quota of 250,000 vehicles. Cars priced below €15,000 are excluded from the agreement. This price floor applies across ICE, EV, and hybrid vehicles. Only vehicles priced above €15,000 will qualify for tariff concessions, with each of the three price segments governed by separate import quotas.

Also Read: EU and India to Discuss Framework for Defence Cooperation 

Current Import Duty Structure

At present, India levies import duties of 110 % on completely built-up (CBU) passenger vehicles priced above $40,000, and 70% on those costing up to $40,000. India and the 27-member European Union concluded negotiations for the free trade agreement on January 27. Once implemented, the pact is expected to enhance market access for both sides.

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