On
January 27, 2026, the historic India-EU Free Trade Agreement (FTA) reached its final negotiation milestone, signaling a dramatic shift for the luxury car market in India. For decades, high import duties have acted as a barrier, but this deal, often called the "Mother of All Trade Deals," is set to change the rules of the road for European auto giants.
1. The Slash in Import Duties
The most striking feature of the agreement is the massive reduction in tariffs on Completely Built Units (CBUs)—cars imported fully assembled from Europe.
Immediate Impact: Duties on eligible cars are expected to drop from the current 110% down to 40% as early as the implementation date.
Long-Term Roadmap: Over the next 5–10 years, these duties are slated to fall further to just 10%.
Qualifications: These cuts primarily apply to cars with a landed value (CIF) of over €15,000 (~₹13.5 lakh), protecting India's domestic mass-market segment.
2. Which Brands and Models Benefit?
The biggest winners are brands that rely on high-end imports to complement their local portfolios.
Luxury Mainstays: Models like the Mercedes-AMG range, BMW M series, and Audi RS variants, which are usually imported as CBUs, will see the most significant price corrections.
Ultra-Luxury & Sports Cars: Exclusive marques like Porsche, Ferrari, Lamborghini, and Rolls-Royce are poised to become significantly more accessible to high-net-worth buyers in India.
Performance Hatchbacks/Sedans: Niche enthusiasts can look forward to more competitive pricing on models like the Volkswagen Golf GTI and Skoda Octavia vRS.
3. The "Fine Print" for Car Buyers
While the headlines are exciting, there are critical nuances to keep in mind:
No Change for Local Assembly: The majority of cars from Mercedes, BMW, and Audi sold in India are already assembled locally from CKD (Completely Knocked Down) kits. These kits already face a much lower duty (approx. 16.5%–35%) and are notexpected to see immediate price drops under the FTA.
EV Waiting Period: To protect domestic manufacturers like Tata and Mahindra, import duty concessions for Electric Vehicles (EVs) will only begin after a five-year grace period.
Quota System: The lower duties will apply only to a limited annual quota of 250,000 vehicles, ensuring a calibrated opening of the market.
4. A New Era of Choice
Beyond just pricing, the FTA is expected to encourage European carmakers to bring their latest global technologies and niche models to Indian shores much faster. India is being positioned not just as a consumer hub but potentially as an export base for European firms to ship locally-made premium cars back to the EU.