India's market for luxury and performance cars is poised for a significant transformation following the official declaration of the India-European Union Free Trade Agreement (FTA). Under this agreement, India has consented to provide the EU with tariff reductions that are unique compared to those given to its other trade partners, which include a gradual lowering of import duties on vehicles.
This development is anticipated to have a direct impact on the pricing of fully imported European cars available in India, especially within the luxury and performance categories. Addressing the update, here's how the stakeholders in the auto industry reacted.
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Mercedes-Benz India:
Santosh Iyer, MD & CEO Mercedes-Benz India: " Mercedes-Benz welcomes the India-EU FTA as it will have a positive cascading effect on customer sentiments for the luxury segment, with boost in overall economic growth. A gradual tariff reduction on vehicles and fully liberalized automotive parts are strategically important decisions in the FTA for the automotive industry. The FTA opens up new avenues for customers with improved vehicle allocations, better availability of top-end global models for Indian market, faster access to latest technology and creating a stronger luxury car ecosystem. Mercedes-Benz will however continue to value add to customers with local production of world-class models from our manufacturing plant. "
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Federation of Automobile Dealers Associations
FADA President, CS Vigneshwar said, "The India-EU FTA is a milestone for the automotive sector, and we are proud that FADA could contribute meaningfully to its shaping. On the request of Hon'ble Commerce & Industry Minister Shri Piyush Goyal ji, FADA undertook a focused study-combining inputs from select European OEMs with rigorous data analysis-and submitted a detailed representation to the Ministry. We later briefed the Minister in person and engaged with the Secretary leading the India-EU negotiations.
The calibrated tariff glide path, TRQ safeguards and protection for India's EV trajectory announced today closely reflect the balanced recommendations we had placed on record. With over 95% of European OEM sales already locally manufactured, this FTA strengthens Make-in-India, expands consumer choice and opens reciprocal export opportunities for Indian OEMs.
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FADA remains committed to providing evidence-led, industry-grounded perspectives that support India's ambition to emerge as a global mobility hub."
Audi India
Balbir Singh Dhillon, Brand Director, Audi India, said, "We welcome the proposed Free Trade Agreement (FTA) between India and the European Union and recognise its potential to deepen economic ties with one of the world's largest trading blocs.
This constructive approach to trade could support the broader automotive ecosystem, including innovation, supply-chain efficiency, and technology collaboration.
That said, any implications for pricing & market can only be assessed once the final terms are available and carefully reviewed, including the timeframe of implementation. Until then, it would be premature to draw conclusions on specific commercial or product strategies.
We are positive that India-EU FTA will create a stable and predictable environment for European automakers to invest, innovate, and better serve Customers in India."
Stellantis India
Shailesh Hazela, CEO & Managing Director, Stellantis India: "The conclusion of the EU-India Free Trade Agreement is a landmark moment that deepens economic cooperation and strengthens India's position in the global value chain. At Stellantis India, we see this agreement as a significant accelerator for our long-term commitment to 'Make in India for the World.' Reduced trade barriers will help enhance manufacturing competitiveness, expand export potential, and support the seamless integration of our India operations into global supply chains.
For our customers in India, this development enables greater access to advanced technologies and the latest offerings from the Stellantis line-up. We appreciate the continued efforts of the Ministry of Commerce & Industry and industry bodies, including ACEA, CLEPA, and FEBI in shaping this forward-looking agreement that benefits India's automotive ecosystem and global partners alike."
Mahindra Group
Dr Anish Shah, Group CEO and MD, Mahindra Group: “The India-EU FTA is a significant milestone as it provides the next wave of economic impetus for India, building on the strong foundation laid by a number of policy reforms.
This FTA will provide meaningful benefits across multiple sectors, as it strikes a very good balance between opening the market while nurturing manufacturing in India.
We see a huge positive for the auto sector as it provides duty-free access to European markets and will attract European OEMs to invest further in India. This agreement is very well designed, as it lowers in-quota duties only at higher priced segments which will enhance scale in the core segments relevant to Make in India for the world. We feel this will not change any competitive dynamics in the industry.
This FTA is one of the most comprehensive Agreements covering themes such as AI, innovation, clean tech, mobility that will boost industry growth across sectors like IT Services, Aerostructures, Finance, Agriculture and Renewable Energy.
The Agreement ushers a generational opportunity for a values-led partnership between two natural allies in a volatile world.”
Skoda Auto Volkswagen India (SAVW)
Piyush Arora, MD & CEO of Skoda Auto Volkswagen India (SAVW): “I heartily welcome the forward-looking India–European Union Free Trade Agreement (FTA), which will further strengthen cooperation between the two regions. As a global company, we strongly support free-trade agreements across markets and geographies. With EU being one of India's largest trading partners, this agreement will further propel the Indian economy, benefit the EU as well, and truly be a win-win for both regions. ”
“ We believe this agreement will benefit customers in both regions. Greater tariff certainty and a more predictable trade framework will allow us to evaluate the introduction of a wider range of European models for Indian customers. Over time, this can support deeper technology transfer, capability building, and long-term investment in the Indian automotive ecosystem. As more details emerge, we will be able to assess the medium- and long-term implications of this agreement. ”
“ However, what remains certain is SAVWIPL's unwavering commitment to offering high-quality, safe, and competitively priced vehicles backed by exceptional service and ownership benefits. With our current lineup and offers, now is truly a great time to make an informed purchase without waiting for speculative changes.”
Toyota Kirloskar Motor
Vikram Gulati, Executive Vice President - Corporate Affairs and Governance, Toyota Kirloskar Motor: “We extend our appreciation to the Government of India for its prudent fiscal and economic policies, which have ensured macroeconomic stability and sustained robust GDP growth despite global trade fragmentation and escalating geopolitical tensions. The rationalization of tax rates along with the GST reform have stimulated demand and reinforced market confidence, thereby contributing to high levels of growth in the automobile sector.
Looking ahead, we anticipate that the forthcoming Union Budget will foster the next phase of development by prioritizing impactful reforms aimed at enhancing the ease of doing business, deepening manufacturing localization, and advancing workforce skills in line with rapid technological advancements. Furthermore, we urge the Government to maintain its focus on infrastructure development and continue its sustained support for multiple green energy pathways to achieve India's long-term goals of energy security and net-zero emissions.
We remain confident that the upcoming Union Budget will continue to deliver balanced and forward-looking policy measures across industries, including the automobile sector, which is a vital contributor to economic growth and employment.”
INDEA
Avik Chattopadhyay, Chairperson, XADM & Founder, INDEA: "The announcement of the India-EU Free Trade Agreement is a significant development for the Indian automobile industry, given the EU's importance as a global automotive and technology hub. With the EU accounting for nearly 17 per cent of India's total exports, the agreement has the potential to expand export opportunities for Indian vehicle manufacturers and component suppliers, while also reshaping competitive dynamics in the domestic market.
For the automobile sector, the key test will be whether increased market access translates into balanced outcomes. While European automakers will seek a stronger presence in the world's third-largest car market, India must secure corresponding gains in technology transfer, skills development, and collaborative R&D, along with better access for Indian brands, particularly in electric two and four wheelers. A successful FTA must deliver a genuine win-win, strengthening trade while reinforcing the long-term competitiveness of India's automobile industry."