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New Delhi-based tech startup founder Ashita Gupta loves her vehicles. With prospects of luxurious European vehicles changing into cheaper, Gupta, who drives an Audi A6, is contemplating shopping for one other high-end automobile.
It “would not make sense” to spend a lot cash on a second automobile, but when an Audi R8 or Audi RS4 have been to turn into “inexpensive” it will be price buying, she says.
On Tuesday, India and the European Union introduced the “mom of all offers,” that features New Delhi slashing import responsibility on European vehicles steadily to 10% from 70%-110% at current. This might apply to a quota of 250,000 automobiles per yr, and on vehicles priced above 15,000 euros ($17,952).
India’s Prime Minister Narendra Modi (C) poses for {a photograph} with European Fee President Ursula von der Leyen (R) and European Council President Antonio Costa in New Delhi, India, on January 27, 2026.
Sajjad Hussain | Afp | Getty Photographs
India has lengthy shielded its auto market, the world’s third largest, through the use of prohibitive ranges of tariffs on imports to safeguard home auto corporations, whereas pushing international companies to construct native manufacturing vegetation.
U.S. President Donald Trump, the truth is, has typically criticized India for shielding its native auto trade from imports and has demanded decrease tariffs on American automobile corporations, calling them “very unfair.”
Now, Brussels has edged out Washington in getting New Delhi to drop its onerous stance on auto tariffs, securing a profitable deal for European auto majors.
“EU manufacturers now have a premium cross to the world’s third largest automobile market, whereas US corporations are at present going through an enormous levy,” Diwaker Murugan, auto analyst at Omdia, instructed CNBC. Omdia estimates India’s automobile market to the touch 6 million by 2030, fueled by a younger inhabitants with larger disposable incomes.
Brilliant deal, dim prospects?
Almost 95% of vehicles bought in monetary yr 2025 have been priced beneath 2 million rupees ($21,756), in line with knowledge from S&P World-owned Indian analysis and scores company Crisil.
However even with the lowered tariffs the value of imported European vehicles will exceed this vary as native taxes get added to the ultimate worth, in line with auto consultants. So, the entire addressable marketplace for European automobile corporations will nonetheless be restricted.
India’s mass automobile market is dominated by Maruti Suzuki and Hyundai — which have been manufacturing in India for greater than 20 years — and native gamers Tata and Mahindra whose excessive‑quantity fashions fall underneath 2.5 million rupees.
The India-EU deal will “enormously assist European car exports enter a market of 4 million passenger vehicles that, till now, has been protected by prohibitively excessive import tariffs,” European Vehicle Producers’ Affiliation mentioned in an announcement, whereas pointing to curbs akin to “quota limitations and residual tariffs that may restrict the potential profit to some extent.”
The highest 5 European luxurious manufacturers, Mercedes-Benz, BMW, JLR, Audi and Volvo, bought 49,000 vehicles in India in monetary yr ended March 2025 in contrast with complete passenger automobile gross sales of 4.3 million, in line with knowledge from S&P World-owned Indian analysis and scores company Crisil.
European automobile corporations dominate the posh phase, however total, their place is “more and more underneath stress” with a shrinking market share, mentioned Puneet Gupta, director of technical analysis at S&P World Mobility.
He explains that Indian and Korean producers have “aggressively scaled up their presence by means of capability growth, frequent product launches, and speedy community development” whereas the Europeans have been comparatively cautious on investments in the previous few years.
The free commerce settlement, which is more likely to come into drive later this yr, might make Europeans corporations reassess their India enterprise plans as commerce obstacles ease, mentioned Gupta.
Hardeep Singh Brar, president and CEO, BMW Group India echoes this sentiment.
FTA might create alternatives to introduce new and area of interest merchandise and, if demand scales, help deeper localization over time,” Brar instructed CNBC in an e-mail trade. The Indian arm of German carmaker BMW Group regionally manufactures over 95% of its vehicles and but it bought a little bit over 18,000 items in 2025 — and that was it highest thus far.
Native issues
This FTA potential, coupled with evolving client preferences, has induced some fear amongst Indian auto traders, because the transfer to slash tariffs so dramatically exposes market leaders to elevated competitors in excessive margin segments.
“The true battleground is the Premium SUV phase” which is priced above 2.3 million rupees, mentioned Omdia’s Murugan. “By permitting European manufacturers to land automobiles at aggressive costs on this bracket, the settlement would possibly create a confrontation between European badge-value and Indian flagship SUVs,” he added.
Some high-end variants of regionally manufactured vehicles like Mahindra’ Scorpio or Tata Safari are priced near 2.5 million rupee and are in style with prospects.
After the deal was introduced on Tuesday, shares of main India auto corporations together with Mahindra & Mahindra, Hyundai Motor India, Maruti Suzuki and Tata Motors ended down between 1.5% and 4%.
Based on Citi, native producers will see competitors “because the hole between high-end fashions from Indian OEMs and entry stage fashions of EU OEMs (at present being imported) narrows.”
However trade leaders and commerce our bodies in India have welcomed the commerce deal, because it nonetheless protects the vast majority of gross sales volumes.
Anish Shah, group chief govt and managing director of Mahindra Group, mentioned the deal is a “big constructive for the auto sector” as it should give Indian carmakers responsibility free entry to markets in Europe and entice European auto corporations to spend money on India.
Whereas most consultants agree that even with the lowered commerce obstacles, European automobile corporations are unlikely to dent the dominance of native auto producers within the close to time period, competitors is about to accentuate as buyer preferences evolve.
Gupta, the tech startup founder, says she needs to see vehicles with higher facilities come to India, and hopes that following the commerce deal, European automobile corporations would launch their newest fashions in India in order that prospects like her can have newest facilities at “cheap” costs.
Prime TV picks on CNBC
Oil India Chairman and Managing Director Ranjit Rath mentioned India’s oil import dependence is unlikely to fall sharply however added that the nation is positioning itself as a world refining hub.
Have to know
India-U.S. commerce deal talks at a really superior stage. A much-anticipated commerce deal between India and the U.S. is at “a really superior stage,” India’s Minister of Petroleum and Pure Gasoline Hardeep Singh Puri instructed CNBC Tuesday. He mentioned he hopes the deal shall be introduced “sooner slightly than later.”
India and EU shut the “mom of all offers.” The European Union and India finalized a free commerce deal on Tuesday that will take away or scale back tariffs on greater than 90% of products traded between the 2. India will decrease tariffs on imported European vehicles and the 2 sides will create a framework permitting for mobility of expertise.
The U.S. SEC seeks to query Gautam Adani over fraud prices. The U.S. Securities and Alternate Fee has sought U.S. courtroom approval to situation summons to Adani Group executives on prices of bribery and fraud. The U.S. regulator mentioned that the Indian authorities has twice refused to ship the sooner summons.
Quote of the week
We have all the time leveraged India as a robust innovation hub … If I take the vitality provide chains, there are solely two locations on the planet the place now we have core analysis together with the vitality gamers. One is Illinois in america, and second is Gurgaon in India.
— Anant Maheswari, president and chief govt of worldwide areas at Honeywell
Within the markets
Indian shares have been flat amid blended buying and selling within the area after the U.S. Federal Reserve stored rates of interest regular. The Nifty 50 index and the BSE Sensex have been little modified on Thursday as of 1 p.m. native time, and are down over 3% thus far this yr.
The benchmark 10-year Indian authorities bond yield ticked up barely to six.716%. The Indian rupee final strengthened marginally to 91.965 towards the buck.
— Lee Ying Shan
Developing
Jan. 29: Fiscal deficit as of December finish
Feb. 1: Indian authorities to current Union Funds for monetary yr 2027
Every weekday, CNBC’s “Inside India” information present provides you information and market commentary on the rising powerhouse companies, and the folks behind its rise. Livestream the present on YouTube and catch highlights right here.
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