India-EU FTA: EU Gets Tariff Quota For 1 Lakh Cars Initially, Rising To 1.6 Lakh

The India-EU free trade agreement will allow European Union carmakers to export up to 1 lakh passenger vehicles a year to India initially at concessional import duties, with the quota rising gradually to 1.6 lakh vehicles from the 10th year, according to the draft text of the pact released on Friday.

The tariff-rate quota (TRQ) covers EU-origin internal combustion engines (ICE) and hybrid electric vehicles (HEVs), with the concessional duty varying according to the vehicle's CIF (cost, insurance, freight) value.

The concession applies only to cars priced above €15,000 (around ₹16.6 lakh). Cars priced below this price will receive no concession.

For cars priced between €15,000 and €35,000 (₹16.6 lakh and ₹38.8 lakh), the in-quota duty falls from 110% to 35% in Year 1 (of implementation of the pact) to 10% in Year 5.

And for cars priced above €35,000 (arpund ₹38.8 lakh), it declines from MFN (most favoured nation) tariff of 66% to 30% in the first year to 10% over the same period.

The quota is divided among three price bands, with 43,000 units reserved for cars priced above €50,000 (around ₹55.40 lakh) from Year 5 onward.

The total quota for ICE and HEV passenger cars will increase from 1 lakh in the first year to 1,07,500 in the second year, 1,15,000 in the third year and 1,22,500 in the fourth year. It will rise to 1.3 lakh in the fifth year and then progressively reach 1.6 lakh from the 10th year onwards.

As per the text, India will also reduce tariffs on EU cars imported beyond the quota. Depending on whether the current tariff is 110% or 66%, the out-of-quota duty on cars priced between €15,000 and €50,000 will gradually fall to 35% by Year 10.

For cars priced above €50,000, it will fall to 30%.

India has separately offered a quota for completely knocked-down internal-combustion and hybrid cars.

This quota is 75,000 units annually for the first five years and then declines gradually to 50,000 units from the 10th year of the implementation of the agreement.

The in-quota duty on these vehicles falls from 13.75% in Year 1 to 8.25% from Year 3, compared with the current 16.5%.

Concessions for battery-electric vehicles, plug-in hybrids and cars using other technologies begin in Year 5 and apply only to vehicles priced at €20,000 (around ₹22 lakh) or more.

Their CBU (completely built units) quota starts at 20,000 cars in Year 5, rises to 50,000 in the 10th year and gradually reaches to 90,000 from Year 14 onward.

The in-quota duty falls from 30% in Year 5 to ten per cent in Year 10 and remains at that level, compared with the listed base duty of 110%.

Electric and other eligible cars priced below €20,000 receive no concession.

Commenting on this, think tank GTRI Founder Ajay Srivastava said that the EU becomes the second major trade partner after the United Kingdom to secure automotive tariff concessions from India under an FTA.

Having established these precedents, India should soon receive similar demands for preferential market access and generous TRQs from other key trade partners such as Japan and South Korea, he said.

"India imported only 17,191 cars from the EU in 2025. Yet the trade agreement gives European automakers a first-year tariff-rate quota of 100,000 completely built-up internal-combustion and non-plug-in hybrid cars -- almost six times current imports," he added.

Srivastava said that under the agreement, India has opened parts of several sensitive markets through tariff-rate quotas and price-based concessions rather than unrestricted tariff cuts.

"These commitments cover automobiles, wine and selected alcoholic products, pork, apples, kiwifruit, pears and peaches. Imports meeting the prescribed origin, price and quantity conditions will enter at lower duties, while most imports outside these limits will continue to face the normal tariff," he said.

TRQ ON WINES AND OTHER ALCOHOLIC GOODS: --------------------------------------------------------------- India has offered tariff concessions on wines imported from the European Union under the pact.

The duty treatment will depend on the CIF value per 750 millilitres, whether the wine is imported in bottles or in bulk.

As per the FTA text, wines valued below €2.50 will receive no concession and will continue to face the base customs duty of 150%.

For wines valued between €2.50 and €10 (around ₹280 and ₹1,100), the duty will fall to 75% in Year 1 and then decline annually to 30% from the eighth year of implementation of the pact.

EU wines valued at €10 (around ₹1 ,100) or more per 750 millilitres will receive deeper concessions. Their duty will fall from the current 150% to 75% during the first year of the implementation of the pact, 67% in Year 2 and progressively to 20% from Year 8 onward.

GTRI said that the concessions cover sparkling wine, wine in containers and in bulk, grape must, vermouth and other flavoured wines.

India has also offered concessions on certain fermented beverages and high-strength alcoholic products other than wine.

Products valued below $5 per 750 millilitres will receive no concession and will continue to face the 150% base duty. But for products valued at $5 or more, the duty will fall to 100% in Year 1 and then decline by five percentage points each year, reaching 50% from Year 11 onward.

The covered products include cider, perry, mead, sake, wine coolers and similar fermented beverages.

TARIFF RATE QUOTA ON OTHER AGRI GOODS: ------------------------------------------------------------- Pork: India will allow 2,000 metric tonnes of EU pork to enter each year at concessional tariffs. The in-quota duty will fall gradually from 31.82% in Year 1 to 20% from Year 11 onward. Imports beyond the quota will receive no tariff concession.

Apples: India will provide a growing quota for EU apples with a CIF price of at least ₹80 per kilogram. The quota will start at 50,000 metric tonnes in Year 1 and increase by 5,000 tonnes annually, reaching 100,000 tonnes from Year 11 onward.

Imports within the quota will face a 20% duty. Apples priced below ₹80 per kilogram will continue to face a 50% duty, while imports exceeding the quota will receive no tariff concession.

Kiwifruit: India will allow 12,000 metric tonnes at concessional tariffs in Year 1. The quota will increase by 300 tonnes annually, reaching 15,000 tonnes from Year 11 onward. The in-quota duty will fall from 16.5% in Year 1 to 10% in Year 6 and remain at that level.

Imports beyond the quota will receive no preferential tariff.

Pears: India will provide the EU with a fixed annual quota of 2,250 metric tonnes of pears. The in-quota duty will decline from 29.17% in Year 1 to 25.33% in Year 2, 21.5% in Year 3, 17.67% in Year 4 and 13.83% in Year 5.

It will fall to 10% from Year 6 onward. Imports exceeding the quota will receive no tariff concession.

Peaches: India has offered the EU a small annual quota of just 20 metric tonnes of peaches. Imports within the quota will face a duty of 26.4% from the date the agreement enters into force. Any imports exceeding the quota will receive no preferential tariff treatment.

The India-EU FTA is likely to be signed by the end of this year and may come into force next year.