The India-EU FTA is all the buzz in the country at the moment and is being named the “Mother of all deals”
India and the EU signed a historic trade deal, which is being popularized across the globe as the “Mother of all deals”. It is the most ambitious trade negotiations either party has ever undertaken with a major economic bloc. Covering market access, services, investments, intellectual property and sustainability, it has the potential to reshape India’s long-term trade architecture with Europe. For Indian manufacturers, the FTA could open doors to a 450-million-strong, high-value market while pushing the domestic industry to meet stricter global standards. At the same time, sensitive sectors like automobiles, dairy and agriculture remain key negotiating flashpoints given Europe’s demand for deeper tariff cuts.
India-EU Free Trade Agreement to Lower Costs of Luxury Cars
Among many sectors mentioned in the FTA, the most interesting for us is the automobile industry. In India, the cost of imported luxury cars is among the highest in the world due to import duties exceeding 100%. To make matters worse, an addition 40% GST is levied. As a consequence, the final ex-showroom price of a luxury car more than doubles the original price. However, all that is about to change. As per this new deal, the import duties will be lowered in a phased manner. Initially, these will go down from 110% to 40%, and finally, it will become just 10%. Understandably, this will impact the costs of CBU cars significantly. Obviously, the deal will take some time for implementation and we might actually experience these new prices a couple of years down the line. Also, this lower import duty will be applicable for 250,000 cars annually.
We decided to pick the example of the popular Land Rover Defender. It is one of the most successful luxury SUVs in the country. The Defender 110 is made in Slovakia and is sold in India as a CBU. At present, the ex-showroom price is Rs 1.03 Crore. The BCF (Base Cost and Freight) cost of the SUV is Rs 35 lakh. With 110% import duty and 40% GST, we get Rs 1.03 Crore. However, once the import taxes go down to 40%, this amount will reduce to Rs 68.6 lakh. Finally, with 10% import duty, the Defender 110 will have an ex-showroom price of just Rs 53.9 lakh. Evidently, this is around the same price as the top variant of the Toyota Fortuner in India.
Editor’s Note
Yatharth Chauhan, Managing Editor
There’s far too much hype and far too little nuance around how quickly the India–EU FTA can slash luxury car prices. Yes, duty rationalization will eventually make CBUs like the Defender far more accessible, but this is a phased, long-term transition, not an overnight price correction. Automakers will also recalibrate pricing strategies, margins and localization plans rather than simply passing on the full benefit to buyers. For now, the Defender under ₹60 lakh remains a mathematical possibility, not an imminent showroom reality.
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