European Union to Allow 2.5 Lakh Indian Cars at Concessional Duty Under FTA, Quota to Reach 4 Lakh in 10 Years
- IBEF
- September 14, 2026
The European Union (EU) will allow 2.5 lakh Indian-made passenger vehicles to enter its market annually at a concessional import duty of 8% under the India-EU Free Trade Agreement (FTA), with the quota expected to increase to 4 lakh vehicles from the 10th year. The concessions will cover Indian-origin Internal Combustion Engine (ICE) passenger cars and Hybrid Electric Vehicles (HEVs) priced up to Euro 50,000 on a Cost, Insurance and Freight (CIF) basis. The tariff rate under the quota will decline gradually from 8% in the first year to 6% in the second year, 4% in the third year, 2% in the fourth year and zero in the fifth year. Vehicles beyond the quota will attract the Most Favoured Nation (MFN) duty.
The agreement also provides separate tariff rate quotas for Battery Electric Vehicles (BEVs), Plug-in Hybrid Electric Vehicles (PHEVs) and other passenger vehicle technologies. For vehicles priced up to Euro 40,000, the quota will begin from the fifth year with 27,500 vehicles at an 8% duty, rising to 1.25 lakh vehicles from the 14th year, with the duty becoming zero from the ninth year. For vehicles priced between Euro 40,000 and Euro 60,000, the quota will start at 16,250 vehicles and rise to 75,000 from the 14th year, while vehicles priced above Euro 60,000 will have a quota beginning at 6,250 vehicles and rising to 25,000 from the 14th year. The EU will also provide quota-based concessions for select Indian agricultural and processed food products, including table grapes, dried onions, cucumbers and gherkins, molasses-based rum and ghee. For ghee, the in-quota tariff will be set at 50% of the base customs duty for an annual quantity of 1,000 metric tonnes from the effective date of the agreement.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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