India to slash tariffs on cars to 40% in trade deal with EU, sources say
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Mon, January 26, 2026 at 5:31 AM EST
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STORY: India plans to slash tariffs on cars imported from the European Union to 40% from as high as 110%.
That was according to sources on Monday (January 26).
It would be the biggest opening yet of the country's vast market as the two sides close in on a free trade pact that could come as early as Tuesday.
Two sources told Reuters that Prime Minister Narendra Modi's government has agreed to immediately reduce the tax on a limited number of cars from the bloc.
With an import price of more than $17,739.
They added this will be further lowered to 10% over time.
And would ease access to the Indian market for European automakers such as VW, Mercedes-Benz and BMW.
India's commerce ministry and the European Commission declined to comment.
India and the EU are expected to announce on Tuesday the conclusion of drawn out negotiations for the free trade pact.
It's already being dubbed "the mother of all deals".
And could expand bilateral trade and lift Indian exports of goods such as textiles and jewellery.
They've been hit by 50% U.S. tariffs since late August.
India is the world's third-largest car market by sales after the U.S. and China.
But its domestic auto industry has been one of the most protected.
New Delhi currently levies tariffs of 70% and 110% on imported cars.
Lower taxes will allow carmakers to sell imported vehicles for a cheaper price.
And, according to one of the sources, test the market with a broader portfolio before committing to manufacturing more cars locally.
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