India Cuts EU Car Tariffs to 40% in FTA

India is set to slash import tariffs on cars from the European Union to 40 percent from current levels as high as 110 percent, marking the most significant opening of its protected automobile market as negotiators finalize a long-awaited free trade agreement expected to be announced as early as Tuesday.

Sources familiar with the talks said the initial reduction would apply immediately to a limited quota of about 200,000 combustion-engine vehicles annually from the 27-nation bloc, provided their import value exceeds 15,000 euros, or roughly 17,739 U.S. dollars. Over time, duties on these cars could fall further to 10 percent, easing market access for European manufacturers including Volkswagen, Mercedes-Benz, BMW, Renault and Stellantis. The quota remains subject to potential last-minute adjustments, the sources added, speaking on condition of anonymity due to the confidential nature of the negotiations.

Battery electric vehicles would be excluded from the tariff cuts for the first five years, allowing India to safeguard domestic investments in the emerging sector by companies such as Mahindra & Mahindra and Tata Motors. After that period, electric vehicles would follow a similar...