India-EU FTA: EU To Allow 2.5 Lakh Indian Cars At 8% Duty, Quota To Rise To 4 Lakh

The European Union has agreed to grant India preferential access for passenger vehicles under the forthcoming India-EU free trade agreement, according to a draft document unveiled by EU officials. Initially, up to 2.5 lakh Indian-made cars priced at or below Euro 50,000 will be allowed yearly entry into the EU market at an 8% duty rate.

This concession applies to Indian-origin internal combustion engine (ICE) and hybrid electric vehicles (HEVs). The concessional duty is set to decrease gradually over time, reaching zero in the fifth year. Concurrently, the annual quota for these vehicles will expand, culminating at 4 lakh vehicles from the tenth year. Vehicles exceeding the quota will face the most favored nation duty.

Cars exceeding Euro 50,000 will not be eligible for quota-based concessions, but their duties will gradually fall to zero by the tenth year. The draft also outlines separate quota systems for battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), and other vehicle technologies. For vehicles priced up to Euro 40,000, the quota officially begins in the fifth year at 27,500 units, with the duty eliminated by the ninth year.

For vehicles priced between Euro 40,000 and 60,000, the quota starts at 16,250 units in the fifth year and expands to 75,000 units by the fourteenth year. The trade pact extends concessions beyond automobiles to select Indian agricultural and processed food items, such as table grapes, dried onions, cucumbers, gherkins, molasses-based rum, and ghee.

For ghee, an in-quota tariff of 50% of the base customs duty is specified for an annual quantity of 1,000 metric tonnes.