India-EU FTA nears finish line: 96% tariff cuts, €4 billion savings and more: Here's a look at what the deal offers

The India-EU free trade agreement grants European Union car manufacturers an initial quota of 1 lakh passenger vehicles per year to export to India at concessional import duties, with the quota increasing to 1.6 lakh vehicles by the 10th year. This tariff-rate quota covers EU-made internal combustion engines and hybrid electric vehicles, with the concessional duty varying based on the vehicle's CIF value.

The concession applies only to cars priced above Rs 16.6 lakh. Cars priced between Rs 16.6 lakh and Rs 38.8 lakh receive progressively decreasing duties over five years, while vehicles priced above Rs 38.8 lakh see their duties decline from MFN tariff of 66 per cent to 10 per cent. The quota is divided into three price bands, with a larger allocation reserved for cars priced above Rs 50,000 starting from the fifth year.

India will also reduce tariffs on EU cars imported beyond the quota, with the duty falling to 35 per cent for cars priced between Rs 16.6 lakh and Rs 50,000, and to 30 per cent for cars priced above Rs 50,000 by the 10th year. Additionally, India offers a quota for CBU internal-combustion and hybrid cars, with the duty gradually falling from 13.75 per cent in Year 1 to 8.25 per cent from Year 3.

Electric and other eligible cars priced at Euro 20,000 or more receive a gradually increasing quota starting from 20,000 units in Year 5, with the duty falling to 10 per cent by the 10th year.