New Delhi, Apr 8 (KNN) India is considering slashing its steep car import tariffs as part of a long-negotiated trade deal with the European Union, according to sources cited by Reuters.

Talks that have stretched over years could be nearing a breakthrough, with Prime Minister Narendra Modi’s government reportedly ready to improve its offer to the EU.

Currently, India levies import duties of over 100 per cent on vehicles. The proposed plan would reduce these tariffs in stages, possibly as low as 10 per cent.

However, domestic automakers like Tata Motors and Mahindra & Mahindra are urging the government to maintain at least a 30 per cent duty and freeze electric vehicle (EV) tariffs for four more years to safeguard local industry.

The push from the EU follows a similar request from the United States under former President Donald Trump, both aiming to open up India’s tightly protected auto market, which sells over 4 million vehicles annually.

If tariffs are reduced, European giants such as Volkswagen, BMW, and Mercedes-Benz could gain a stronger foothold in India. Tesla, too, stands to benefit as it plans to enter the Indian market with imported EVs, likely from its Berlin factory.

Last week, India’s commerce ministry held meetings with officials from the heavy industries ministry and key industry players to evaluate the EU’s latest proposal.

European Council President António Costa recently urged progress, saying on X it was time to “decisively advance” in the talks.

India’s automakers have proposed a phased reduction, suggesting tariffs on some petrol vehicles be cut to 70 per cent immediately and then gradually to 30 per cent, while keeping EV duties unchanged until 2029.

The EU and India aim to finalise the trade deal by the end of 2025. As one industry source said, “It’s all about leverage.”

(KNN Bureau)