MUMBAI, India — Indian auto component manufacturers are expected to gain improved access to European markets and stronger price competitiveness under the proposed India–European Union free trade agreement, according to a new industry report.
The report said tariff rationalization and preferential market access under the agreement are likely to enhance pricing competitiveness and expand sourcing opportunities for Indian suppliers working with European original equipment manufacturers. With the EU serving as a major global hub for automotive production, improved trade terms could allow Indian companies to deepen their participation in international supply chains.
Analysts noted that better access could help Indian component makers compete more effectively with suppliers from countries that already enjoy tariff advantages in the European market. Currently, automobiles and auto components account for about 3% of India’s exports to the EU, indicating significant room for growth as trade barriers are reduced.
The proposed agreement includes a phased reduction in import duties on EU-origin completely built units, with tariffs expected to fall from levels as high as around 110% to approximately 10% within defined price thresholds and quota limits. The report said this change is likely to primarily affect premium vehicle segments, while mass-market passenger vehicles in India are expected to remain largely insulated.
Electric vehicle tariffs are expected to remain unchanged in the initial stages of the agreement, providing domestic EV supply chains time to adapt to evolving trade dynamics.
Improved market access is also expected to support new investments in precision engineering, electronics integration, and specialized component manufacturing. The report said the agreement could encourage greater technology collaboration and product diversification between Indian and European automotive companies.
Export-focused mid-sized firms and micro, small, and medium enterprises producing specialized components and aftermarket products could particularly benefit as European buyers diversify sourcing bases and adjust procurement strategies within global automotive supply chains.
On the import side, the report said tariff reductions are likely to benefit mainly premium internal combustion engine vehicles, with limited impact on small and mid-segment cars in the domestic market.
Under the proposed deal, the EU would grant India zero-tariff access on 97% of its tariff lines, covering 99.5% of India’s export value, while India would eliminate or reduce tariffs on about 92% of its tariff lines. (Source: IANS)
