India to Slash Car Tariffs to 40% in Trade Deal with EU

India plans to slash tariffs on cars imported from the European Union (EU) to 40% from as high as 110%, sources said, marking the biggest opening yet of the country’s vast market as the two sides close in on a free trade pact, Aditi Shah and Philip Blenkinsop reported for Reuters.

The tariff will be further lowered to 10% over time, easing access to the Indian market for European automakers such as Volkswagen, Mercedes-Benz, and BMW. (Photo: Volkswagen) 

Prime Minister Narendra Modi’s government has agreed to immediately reduce the tax on a limited number of cars from the 27-nation bloc with an import price of more than 15,000 euros ($17,739), two sources briefed on the talks told Reuters.

The tariff will be further lowered to 10% over time, they added, easing access to the Indian market for European automakers such as Volkswagen, Mercedes-Benz, and BMW, Lili Bayer and Shivangi Acharya also reported for Reuters.

The sources declined to be identified as the talks are confidential and subject to last-minute changes. India’s commerce ministry and the European Commission declined to comment.

India and the EU are expected to announce soon the conclusion of protracted negotiations for the free trade pact, after which the two sides will finalize the details and ratify what is being called “the mother of all deals.”

The pact could expand bilateral trade and boost Indian exports of goods such as textiles and jewelry, which have been hit by 50% US tariffs since late August.