India-EU FTA: Which cars will get cheaper after 'mother of all deals'? Know details here

New Delhi: According to the India-EU Free Trade Agreement (FTA), India will allow the import of only 250,000 European cars annually at a reduced tax rate. The import duty, which was previously up to 110%, has now been reduced to just 10%. However, this benefit is limited to an annual quota of 250,000 cars. This makes it clear that not all European cars will suddenly become cheaper; the benefit will only apply to a limited number of vehicles.

Is there any relief for electric cars?

An important aspect of this deal is that electric vehicles (EVs) have not been given any tax concessions. This means that electric cars imported from Europe will remain as expensive as before. This decision is considered crucial for protecting the domestic EV industry.

What is the major benefit for European car companies?

This agreement could significantly benefit Volkswagen, Renault, Stellantis, and luxury brands like Mercedes-Benz and BMW. These companies already have local manufacturing facilities in India, but due to high taxes, they were only able to import a limited number of models.

What is the expected effect on the car market?

Currently, European companies have less than a 4% share of the Indian car market. However, this picture could gradually change after the FTA. India is already the world's third-largest car market after the US and China. It is estimated that annual car sales in India could reach 6 million units by 2030.

Seeing these possibilities, Renault is making a comeback in India with a new strategy. The Volkswagen Group is also preparing for new investments through its Skoda brand.

How will India-EU trade be affected?

In the financial year 2024-25, the total trade between India and the EU was $136 billion. India's exports were $76 billion and imports were $60 billion. The EU is India's largest trading partner. This FTA comes at a time when the US is increasing tariffs and export controls on China are becoming stricter. In this situation, both India and the EU want to open up new markets.

What did PM Modi say?

Prime Minister Narendra Modi described this FTA as the mother of all deals, saying that this agreement will further strengthen the confidence of global investors in India. He also said that this deal connects two of the world's largest economies, which together account for approximately 25% of the world's GDP.