E.U. edges out U.S. as New Delhi readies to slash duties on imported cars
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New Delhi-based tech startup founder Ashita Gupta loves her cars. With prospects of luxury European cars becoming cheaper, Gupta, who drives an Audi A6, is considering buying another high-end vehicle.
It “doesn’t make sense” to spend so much money on a second car, but if an Audi R8 or Audi RS4 were to become “affordable” it would be worth purchasing, she says.
On Tuesday, India and the European Union announced the “mother of all deals,” that includes New Delhi slashing import duty on European cars gradually to 10% from 70%-110% at present. This would apply to a quota of 250,000 vehicles per year, and on cars priced above 15,000 euros ($17,952).
India’s Prime Minister Narendra Modi (C) poses for a photograph with European Commission President Ursula von der Leyen (R) and European Council President Antonio Costa in New Delhi, India, on January 27, 2026.
Sajjad Hussain | Afp | Getty Images
India has long shielded its auto market, the world’s third largest, by using prohibitive levels of tariffs on imports to safeguard domestic auto companies, while pushing global firms to build local manufacturing plants.
U.S. President Donald Trump, in fact, has often criticized India for protecting its local auto industry from imports and has demanded lower tariffs on American car companies, calling them “very unfair.”
Now, Brussels has edged out Washington in getting New Delhi to drop its hard stance on auto tariffs, securing a lucrative deal for European auto majors.
“EU brands now have a premium pass to the world’s third largest car market, while US companies are currently facing a huge levy,” Diwaker Murugan, auto analyst at Omdia, told CNBC. Omdia estimates India’s car market to touch 6 million by 2030, fueled by a young population with higher disposable incomes.
Bright deal, dim prospects?
Nearly 95% of cars sold in financial year 2025 were priced below 2 million rupees ($21,756), according to data from S&P Global-owned Indian research and ratings agency Crisil.
But even with the lowered tariffs the price of imported European cars will exceed this range as local taxes get added to the final price, according to auto experts. So, the total addressable market for European car companies will still be limited.
India’s mass car market is dominated by Maruti Suzuki and Hyundai — which have been manufacturing in India for more than two decades — and local players Tata and Mahindra whose high‑volume models fall under 2.5 million rupees.
The India-EU deal will “greatly help European automobile exports enter a market of 4 million passenger cars that, until now, has been protected by prohibitively high import tariffs,” European Automobile Manufacturers’ Association said in a statement, while pointing to curbs such as “quota limitations and residual tariffs that will limit the potential benefit to…
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