India is set to reduce tariffs on cars imported from the European Union from as high as 110% to 40%. This move is the largest opening of India's car market as talks near completion on a free trade pact expected by January 27, 2026. Two sources with knowledge of the negotiation told Reuters that the cut applies immediately to cars priced above 15,000 euros ($17,739). The tariff will be gradually reduced further to 10%, easing European automakers' entry into the Indian market. Brands like Volkswagen, Mercedes-Benz, and BMW will benefit from this change. Sources asked not to be named as talks remain confidential. India's Commerce Ministry and the European Commission declined to comment. This agreement, hailed as "the mother of all deals," will finalize free trade terms expanding bilateral trade. It aims to also boost Indian exports like textiles and jewellery, currently hit by a 50% U.S. tariff since August. India is the world's third-largest car market after the U.S. and China but has protected its domestic car industry heavily. Present tariffs on imported cars are 70% or 110%, often criticized by industry leaders including Tesla's Elon Musk. The new pact proposes slashing import duties to 40% immediately on about 200,000 combustion-engine cars per year, with possible small changes before the final deal. Electric vehicles (EVs) will not get duty cuts for the first five years. This protects investments by Indian players like Mahindra & Mahindra and Tata Motors in the growing EV sector. After five years, EV tariffs will also be eased. Currently, European carmakers hold less than 4% of India's 4.4 million annual car sales, dominated by Suzuki, Mahindra, and Tata, who together cover two-thirds of the market. With India's market expected to reach 6 million cars annually by 2030, companies like Renault and Volkswagen plan new investments. Renault aims to revive its India presence, while Volkswagen's Skoda brand prepares for growth. This landmark trade deal is set to reshape India's auto import landscape and strengthen European manufacturers' foothold in the booming Indian market.