EU carmakers face tough conditions in India despite trade deal

European carmakers may still face significant challenges in the Indian automotive market despite a new free trade agreement between the European Union and India, as reported by the news agency Reuters. The agreement provides for a substantial reduction in tariffs on imported vehicles, yet the market remains difficult for foreign suppliers. The new trade rules are expected to lower import duties on vehicles from the EU from the current up to 110 percent to around 40 percent, and over time even to 10 percent, which should improve access for manufacturers like Volkswagen, Renault, Mercedes-Benz, BMW, and Stellantis, according to the Reuters report. Despite this opening, European automakers currently hold a market share of less than three percent in India, which is the world's third-largest automotive market. Analysts emphasize that the Indian market is traditionally dominated by affordable, compact models offered by local and Asian manufacturers like Suzuki, Mahindra, and Tata. These brands have a deep understanding of regional requirements and are firmly established in India, making it difficult for European premium and volume manufacturers to gain a quick foothold. Although the free trade agreement opens up long-term opportunities for growth, the competitive landscape remains demanding, as European manufacturers must compete with both strong local providers and established Japanese and Korean brands. The higher tariffs in the past had further complicated market entry for foreign companies. Industry experts nevertheless see potential, especially in the premium segment, where brands like Porsche and other European manufacturers could benefit from a reduction in import barriers. However, a full expansion of market presence is likely to require additional local production, adaptation to Indian consumer preferences, and further strategic investments. India remains a strategically important market for global automakers despite the new trade agreement, primarily due to its size—with around 4.4 million vehicles sold annually—and its forecasted growth in the coming years