Industry Odisha Bureau, Sep 14: The India-EU FTA will let 2.5 lakh Indian cars enter the EU at 8% duty. That quota will rise to 4 lakh vehicles by Year 10.
The European Union will allow 2.5 lakh Indian cars in annually. This is an annual tariff-rate quota, not a guaranteed sales figure. Eligible vehicles would enter at a concessional 8% duty. The quota would eventually expand to 4 lakh vehicles. That expansion happens gradually, reaching 4 lakh by Year 10.
India-EU FTA sets 2.5 lakh car quota
The concession applies under the draft India-EU free trade agreement. It covers Indian-origin ICE and hybrid passenger vehicles. Eligible cars must be priced up to €50,000 CIF. CIF includes the vehicle price, freight and insurance costs. The initial annual quota stands at 2.5 lakh vehicles.
EU car duty falls to zero by Year Five
The in-quota duty starts at 8% in Year 1. It falls to 6% in Year 2 and 4% in Year 3. The duty drops to 2% in Year 4. It reaches zero by Year 5. The quota itself keeps growing towards 4 lakh vehicles. That milestone arrives from Year 10 onward. Vehicles beyond the quota face standard MFN duty. Cars priced above €50,000 follow a separate schedule. Their duty falls from 8% to zero only by Year 10.
Electric vehicles get separate FTA schedule
Battery and plug-in hybrid electric vehicles get their own quotas. These EV concessions begin only from Year 5. Three separate price categories determine EV quota levels.
EV quotas expand over longer transition
For EVs priced up to €40,000 CIF, the quota starts at 27,500 vehicles. It rises to 60,500 vehicles by Year 9. The quota reaches 1,25,000 vehicles from Year 14. Duty on this category is removed from Year 9.
For cars priced €40,000 to €60,000, the quota starts at 16,250 vehicles. It expands to 75,000 vehicles from Year 14.
For cars above €60,000, the quota begins at 6,250 vehicles. It grows to 13,250 vehicles by Year 9. It then reaches 25,000 vehicles from Year 14.
India automobile exports gain wider EU access
Lower duties could improve market access for qualifying Indian vehicles. They do not guarantee Indian manufacturers will fill these quotas. Actual exports will depend on demand and other factors.
FTA uses phased automobile market opening
The structure does not remove tariffs immediately. Instead, it spreads liberalisation across several years. ICE and hybrid concessions begin sooner than EV concessions. The FTA’s conclusion was announced on January 27, 2026. It is expected to be signed later this year. It may come into force from 2027.
The quotas create preferential tariff treatment, not guaranteed sales. How much of that access gets used remains to be seen.
