The nation’s largest-ever FTA is anticipated to spice up shipments of electrical automobiles and auto elements, decrease prices for imported expertise and equipment, and encourage joint ventures and expertise partnerships between Indian producers and European car makers, business executives mentioned.
Multinational automakers working in India might more and more use the nation as an export base for each electrical and inside combustion engine (ICE) automobiles, whereas the biggest long-term positive factors would accrue to auto part suppliers, they mentioned.
The proposed FTA might materially enhance market entry for Indian suppliers and speed up their integration into European worth chains, mentioned Prasanth Doreswamy, president and CEO of Continental India, a expertise and mobility options agency. “Decrease tariffs and clearer commerce guidelines will assist Indian suppliers combine extra deeply,” he mentioned.
India exported $3.73 billion price of auto elements to Europe within the first half of FY26, a rise of about 11% over $3.36 billion within the year-ago interval, making it the biggest vacation spot forward of the US, Asia and Latin America, in accordance with knowledge from Automotive Part Producers Affiliation of India (ACMA).
Indian auto elements makers are going through rising uncertainty within the US-their single-largest abroad market-amid tariff-related pressures. Trade executives mentioned long-term export orders from the US have slowed as automakers stay cautious about future sourcing plans following increased duties imposed beneath Part 232 and reciprocal tariffs introduced final 12 months.”On the face of it, the most important alternative is for exports to Europe and integration into the European provide chain,” Doreswamy mentioned.
Vinnie Mehta, director basic of ACMA, mentioned the pact would assist Indian suppliers scale globally. “The India-EU FTA can catalyse the following section of development for India’s auto-component business by enabling expertise collaboration, higher export competitiveness and long-term funding flows,” he mentioned.
Indian car makers have already begun scaling up their European play. Maruti Suzuki has shipped greater than 13,000 items of its electrical SUV e-Vitara to 29 nations, largely in Europe. Royal Enfield and Hero MotoCorp have additionally introduced plans to increase their electrical car footprint on the continent.
Whereas particulars of the settlement are nonetheless awaited, sources mentioned India and the EU have arrived at quota-based mutual concessions for automobiles, together with phased reductions in duties on auto elements. A few of these cuts are anticipated to be applied instantly, others within the medium time period, and a 3rd set over an extended horizon of as much as 10 years, when duties might fall to zero.
G Ok Sharma, chairperson, India area at OPmobility, an automotive provider and expertise companion, mentioned the settlement might spur recent funding and joint improvement exercise.
“Europe is beneath value strain, and India gives a aggressive manufacturing and engineering base. This settlement strengthens India’s place as a long-term companion for manufacturing, expertise and joint improvement,” he mentioned.
India at the moment accounts for round 3% of world commerce in superior auto elements. The federal government has urged the business to extend part exports to $60 billion-from $20.1 billion in FY23-and car exports to 25% of whole output-from about 14% in FY23-by 2030.
