What happened
Reuters reports that India has agreed to reduce import duties on cars from the EU from 110% to 40%. The parties are nearing the announcement of a free trade agreement — a step that could be officially presented as early as Tuesday, according to sources.
"India plans to reduce tariffs on cars from the European Union from 110% to 40%. Both sides are nearing the conclusion of a free trade agreement..."
— Reuters, sources in the negotiations
Key details
New Delhi is proposing an initial reduction of duties for a limited number of models from 27 countries of the bloc — for imports priced above €15,000. Some of these duties are to fall to 10% over time. At the same time, battery electric vehicles will not be subject to the reduction during the first five years, to protect domestic manufacturers, including Mahindra and Tata.
The immediate cut is expected to apply to about 200,000 cars a year. European brands — Volkswagen, Mercedes‑Benz, BMW — will gain easier access to the world's third‑largest market, where their current share is under 4%.
Why this matters
First, it changes the economic logic for manufacturers: lower tariffs make India more attractive for direct investment and for testing new models. Second, the mechanics of the deal — gradual tariff alignment and an exception for EVs — shows that New Delhi aims to both attract capital and protect green investments in the domestic industry.
Who this affects most
Local manufacturers, which previously benefited from high tariffs as a barrier to imports, will come under pressure. European companies get a platform to increase sales and production programs. Analysts predict that the Indian market could reach 6 mln cars a year by 2030 — a factor that is already spurring investment plans.
What this means for Ukraine
The consequences for Ukraine are mixed: on one hand, stronger competition in the market for components and finished cars could put pressure on domestic producers; on the other, India's opening to European players creates opportunities to integrate into new supply chains.
Practical implications for Ukrainian industry:
- Opportunity to export modules and components to plants that will scale up in India for European brands.
- The need to raise quality and production standards to meet OEM requirements — this is a chance for modernization and diversification.
- Temporary pressure on prices and competition in the region, requiring adaptation of industrial support policies.
Conclusion
Deals of this scale rewrite the rules for the auto industry and supply chains. For Ukraine the key task is to view this not only as an external shock but as an opportunity: accelerate integration into European manufacturing chains, increase the competitiveness of component exports, and seek niches where Ukrainian companies can offer added value. Declarations must turn into concrete contracts — and here the initiative lies with businesses and support policy.
