India-EU FTA: Which luxury cars are likely to get cheaper?

Although EU carmakers hold only 3% of the Indian car market, anticipation is building around the India-EU Free Trade Agreement (FTA). Automotive enthusiasts and buyers are eager to see which luxury cars will become cheaper, if not outright affordable.

Under the terms of this FTA, import duties on European-made cars priced above 15,000 euros (approximately Rs 16.82 lakh) will be cut from 110 per cent to about 35 per cent in the first year and to 10 per cent in subsequent years.

At present, India levies customs duties on fully imported cars under a two-tier structure based on their CIF (cost, insurance and freight) value. Vehicles valued at up to USD 40,000 incur a 70 per cent import duty, whereas models exceeding that threshold are taxed at 110 percent.

The clearest beneficiaries of the FTA will be Completely Built Units (CBUs) imported directly from Europe. These vehicles currently attract some of the highest import duties in the world, making India one of the most expensive markets for premium European automobiles.

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For Mercedes-Benz, it’s likely that their top-end AMG and Maybach models, arriving in India via the CBU route, will get cheaper —although the brand has not communicated just how much, or which specific models it would consider adding to its India portfolio. According to Brendon Sissing, Vice President of Sales & Marketing at Mercedes-Benz India, the impact of the FTA on the brand’s portfolio, while not significant, will allow them to import an even greater variety of cars.

“We're not completely out of the woods yet. Do we believe it could expand the performance offering? Yes, I believe it would expand the performance offering. But if we take a step back, we're talking about roughly 5% of our portfolio today that could potentially benefit. CBU imports account for about 5% of what we sell in India, so it's a relatively small portion,” Sissing said.

Amey Tingare, Brand Director, Overseas Region at Maserati, admitted that the entire range of Maseratis in India would benefit from the FTA, but expressed skepticism regarding the timeline. The trade deal is awaiting formal legal signing and ratification by both India and the European Union.

“It’s too early to quantify the exact impact on pricing across our range. There remains considerable uncertainty regarding the implementation, timeline and the final structure of the agreement,” said Tingare, adding that its implementation would allow for greater access to Maserati models while increasing overall market competitiveness.

McLaren, Ferrari prices to drop

Recent reports by Autocar Professional have confirmed that Ferrari dealerships in India are taking orders at 30% lower prices, in anticipation of the India-EU FTA. According to the publication, this means that the price of a Ferrari Purosangue, currently retailing at Rs 12.44 crore (on-road), will likely drop by Rs 2.91 crore. The Purosangue is Ferrari’s maiden, four-door, V12-powered SUV, sitting alongside the V12-powered 12Cilindri to occupy the top rung of Ferrari’s portfolio in India. The latter is expected to become cheaper by up to Rs 2.77 crore.

All BMW M cars, which aren’t made in the US or Mexico, will also benefit from the India-EU FTA, as will Audi’s RS-powered cars. It should be noted that EV imports will not benefit from duty reductions until the fifth year of the agreement. All ICE (Internal Combustion Engine)-powered Porsches will also get cheaper. While Porsche has not specified exact figures, estimates based on the FTA suggest the price of the Porsche 911 Carrera GTS could be slashed by Rs 98 lakh.

For cars being imported from the UK, the price drop is, obviously, more significant. According to Autocar India, British supercar maker McLaren is also set to drop by up to 38%—the most significant drop yet. This means models like the 750S (coupe and Spider) will see prices drop by a whopping Rs 3 crore, going up to Rs 3.2 crore for the Spider.

The ethanol bugbear

The FTA will come into effect at a time when the government is contemplating higher ethanol blends in petrol. Given that these cars are manufactured in Europe, where they’re compatible with E10 blends, there’s no confirmation on whether specific engineering changes will be made to make them more compatible with higher blends E22, E27 etc.

Mercedes-Benz's Sissing maintains that the central government’s decision to increase ethanol quantity per litre of petrol is unlikely to deter the brand’s dedicated supercar base. “To be very honest, I haven't heard customers in this segment talking about fuel. They want the heartbeat, the thump, the grunt, and the power of these engines. They want access to these vehicles at the same time the rest of the world gets them. The conversation is more about how quickly we can get products to market, and how we can leverage the FTA to expand the portfolio.”

Timeline

At present carmakers are unsure as to exactly when the FTA will go through. According to Sissing, “Authorities may be trying to push this process faster, but our read on timing suggests there's still some way to go. Our view has always been that it would probably be in the latter part of 2027 or early 2028.”

However, the deal might go ahead sooner than expected with European Commission President Ursula von der Leyen confirming that the European Union will formally sign this landmark trade deal with India by the end of 2026.

(Parth Charan is an automotive journalist based in Mumbai)