India–EU Trade Deal May Cut Luxury Car Prices in India by Over Rs 25 Lakh
Luxury cars in India could become significantly more affordable if the proposed India–European Union trade deal goes through as planned. The agreement, expected to be announced soon, aims to revise import duty structures that have long kept fully built European cars out of reach for most buyers. If implemented, the change could reshape the premium and luxury car market almost overnight.
How the India–EU Trade Deal Could Cut Luxury Car Prices in India
At present, fully built European cars imported into India attract customs duties that can go as high as 110 percent. This means the tax burden often rivals or even exceeds the vehicle’s original cost by the time it reaches Indian showrooms.
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Under the proposed framework, internal combustion engine vehicles priced above 15,000 euros would see import duties reduced to 40 percent in the first phase, subject to an annual import cap of around two lakh units. Over time, tariffs are expected to fall further, potentially approaching 10 percent. Even after accounting for GST and dealer margins, this change alone could lower ex-showroom prices by 30 to 50 percent on certain models, translating to savings of over Rs 25 lakh in some cases.
Which Luxury Cars Will Benefit and What It Means for Buyers
European luxury brands such as BMW, Mercedes-Benz, Audi, Porsche and Volkswagen stand to gain the most from the revised duty structure. The immediate impact will be felt in the premium and luxury segments, while mass-market cars are unlikely to see any major change.
Electric vehicles from the EU will remain excluded initially, with a proposed five-year buffer to protect domestic EV programmes. Local assembly will also continue to enjoy tax advantages, ensuring that localisation remains relevant. For buyers, the deal could finally make imported luxury cars far more attainable, while giving global brands a clearer path to expand in India.
