The free trade agreement between the European Union and India, signed on January 26, could be a turning point for European automakers seeking to grow beyond the stagnant domestic market and increasingly closed China, thanks to the dramatic reduction of India's long-standing import barriers, Automotive News reported.
According to the agreement, duties on 90% of EU goods imported to India will be reduced or eliminated, which will allow EU companies to save about 4 billion euros per year. Most importantly for the automotive industry, import duties on cars will be immediately reduced from 110% to 35%, and then to 10% over five to ten years, taking into account an annual quota of 250,000 vehicles, which will open up the world's third largest automotive market - 4.5 million sales in 2025 — to more a wide range of European products. The deal is expected to benefit German premium brands, as well as mass market groups such as Renault, Volkswagen and Stellantis, which already manufacture products locally but have been limited in importing higher-end models.
In response to the deal, ACEA called it "an outstanding event in global trade relations" that will finally allow European exports to enter a market "that has so far been protected by extremely high import tariffs." OICA also described the deal as "an important milestone for European automakers, as well as for India's growing market and industry," highlighting its strategic importance as Europe focuses on India's expanding middle class and long-term industrial potential.
