India-EU Trade Deal: Are Lower-Priced Luxury Cars Really Coming?

While duties on imported cars from Europe would indeed be slashed to just 10 percent, the fine print needs to be understood.

By : Somnath Chatterjee | Updated at : 03 Feb 2026 12:58 PM (IST)

india eu trade deal luxury cars India-EU Trade Deal: Are Lower-Priced Luxury Cars Really Coming?

What cars do fall under the scheme include higher priced sports cars or super expensive SUVs which are imported.

Source : Somnath Chatterjee

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The India-Europe Free trade agreement has been talked about a lot but amongst the cheer that imported cars would be half in price along with the fact that if you are dreaming of parking a BMW on your driveway for the price of a compact SUV then you might be in need of a reality check.

While duties on imported cars from Europe would indeed be slashed to just 10 percent, the fine print needs to be understood. First of all, the BMW and Mercedes-Benz cars that you might be thinking about in terms of the price reduction won't fall under this scheme because 95 percent of total cars sold by these German luxury car makers are assembled in India which means they won't be affected. A BMW X1 or Mercedes-Benz GLC price won't be reduced.

Which Cars Actually Benefit?

What cars do fall under the scheme include higher priced sports cars or super expensive SUVs which are imported. They are anyways sold in much smaller numbers and yes, while their prices could reduce, the price-tags would still be sky high. Also, the duties would be gradually reduced and not in one go while these to be implemented could take years plus add in exchange rates then the differences could narrow down.

India-EU Trade Deal: Are Lower-Priced Luxury Cars Really Coming?

Hence, expect Audi RS Q8 and AMG models plus BMW M models to be priced lower but they still will remain expensive toys with a much smaller buyer base. We can see the Defender which is manufactured in Slovakia to get benefits but even that could be assembled in India soon.

While the real effect may be smaller, it could open up the Indian automotive segment where manufacturers can experiment more with CBU imported cars hence we can see more enthusiast cars on sale within a few years.

Frequently Asked Questions

Will imported cars become half the price due to the India-Europe Free Trade Agreement?

No, you might need a reality check. While duties on imported cars will be slashed to 10 percent, many luxury cars assembled in India won't be affected.

Why won't brands like BMW and Mercedes-Benz see significant price drops on their common models?

Because 95 percent of their cars sold in India are assembled locally. Therefore, these models won't qualify for the duty reduction under the agreement.

Which types of cars are likely to benefit from the duty reduction?

Higher-priced sports cars or very expensive SUVs that are imported are expected to see price reductions, though they will still remain expensive.

Will the duty reduction be immediate and significant for all imported cars?

No, duties will be reduced gradually over several years. Exchange rates and potential local assembly could also narrow the price differences.

About the author Somnath Chatterjee

Somnath Chatterjee has been working as an automobile journalist for the better part of a decade and is still in love with four wheels. Prefers being behind the wheel of a new car rather than a keyboard. He contributes expert Auto articles and guides for ABP Live English.