The nation’s largest-ever FTA is predicted to spice up shipments of electrical autos and auto components, 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 may more and more use the nation as an export base for each electrical and inner combustion engine (ICE) autos, whereas the biggest long-term good points would accrue to auto element suppliers, they mentioned.
The proposed FTA may 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 components 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 response to information from Automotive Element Producers Affiliation of India (ACMA).
Indian auto components makers are going through rising uncertainty within the US-their single-largest abroad market-amid tariff-related pressures. Business executives mentioned long-term export orders from the US have slowed as automakers stay cautious about future sourcing plans following larger duties imposed underneath Part 232 and reciprocal tariffs introduced final yr.”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 common of ACMA, mentioned the pact would assist Indian suppliers scale globally. “The India-EU FTA can catalyse the following part 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 autos, together with phased reductions in duties on auto components. 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 may fall to zero.
G Ok Sharma, chairperson, India area at OPmobility, an automotive provider and expertise associate, mentioned the settlement may spur contemporary funding and joint growth exercise.
“Europe is underneath price strain, and India affords a aggressive manufacturing and engineering base. This settlement strengthens India’s place as a long-term associate for manufacturing, expertise and joint growth,” he mentioned.
India at the moment accounts for round 3% of world commerce in superior auto components. The federal government has urged the business to extend element 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.
