India and the European Union (EU) have concluded talks on a free trade agreement (FTA), announced on January 27, 2026. This deal will reduce duties on luxury European cars, making brands like BMW, Mercedes, Lamborghini, Porsche, and Audi cheaper in India. The agreement is expected to be signed later this year and start early next year. Under the pact, India will offer quota-based import duty concessions, cutting levies to 10% for a specified number of cars from the EU. Currently, import duties on automobiles in India range from 66% to 125%. The EU will remove duties on Indian car exports in phases. Lamborghini, which imports all models to India with prices starting around ₹3.8 crore, stands to benefit greatly. A commerce ministry official said, "The EU has got a very well laid out auto industry, one of the most advanced auto industries, and their cars are one of the best, and it is a reality." To protect India’s growing auto sector, mainly small cars priced between ₹10 lakh and ₹25 lakh, the EU will not export cars in this price range to India. Instead, such cars may be manufactured locally in India. The official added, "Taking note of sensitivity on both sides, we have agreed to a quota-based ecosystem, wherein we are trying to take care of each other’s sensitivities." The import quotas will increase over time. Once the quota is exceeded, EU manufacturers are encouraged to set up production facilities in India to tap into the expanding market under the ‘Make in India’ initiative. This move is expected to create jobs and increase manufacturing collaboration. The official explained, "For every car quota that we have given them, we take 2.5 tile quotas from them... We are giving quota duty reduction, phased duty reduction in five years." For electric vehicles (EVs), duty concessions will begin after five years of the agreement. Currently, imported passenger vehicles priced below $40,000 attract a 70% customs duty; those above face effective duties of 110%. The FTA aims to gradually reduce barriers, promote competition, and enhance the manufacturing ecosystem in both India and the EU. The government supports this with initiatives like the Automotive Mission Plan 2047 to boost global competitiveness.