With tariffs set to fall, German carmakers may finally have a real chance to expand in one of the world’s fastest-growing automotive markets
A new trade agreement between India and the European Union could mark a turning point for German carmakers that have so far struggled to gain a strong foothold in the Indian market.
Finalised in January, the EU–India trade deal has been described by European Commission President Ursula von der Leyen as “the mother of all trade deals”.
The agreement links the world’s largest trading bloc with its most populous country and aims to boost trade by cutting or removing tariffs on 96.6 per cent of EU exports to India.
One of the biggest beneficiaries could be Europe’s car industry.
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Until now, high Indian import duties — ranging from 70 per cent to as much as 110 per cent — have made European cars expensive and limited their appeal
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As a result, well-known German brands such as Volkswagen, Mercedes-Benz and BMW have had only a small presence compared to their success in other global markets
Under the new deal, India has agreed to offer European carmakers a much larger import quota than ever before. If the agreement is ratified, up to 250,000 European-made vehicles will be allowed into India each year at reduced tariff rates. These rates will vary based on factors such as vehicle price and engine type, while cars imported outside the quota will continue to face higher duties.
For Germany’s car industry, which has been under pressure from Chinese competition, the shift to electric vehicles and wider global trade challenges, the deal brings rare optimism. The German automotive trade body VDA has welcomed the agreement, calling it a timely step towards better market access in an increasingly protectionist world.
BMW has also praised the deal, describing it as a historic milestone and highlighting India as a key growth market.
