India’s Prime Minister Narendra Modi (C) poses for {a photograph} with European Fee President Ursula von der Leyen (R) and European Council President Antonio Costa earlier than their assembly on the Hyderabad Home in New Delhi on January 27, 2026.
Sajjad Hussain | Afp | Getty Photographs
A landmark trade deal between the European Union and India has been lauded as a serious breakthrough for Europe’s largest carmakers, though analysts have flagged competitors considerations in one of many world’s quickest rising markets.
The EU and India on Tuesday signed what European Fee President Ursula von der Leyen and India Prime Minister Narendra Modi described because the “mother of all deals.”
The long-pending agreement, which comes as either side search to strengthen ties amid U.S. tensions, contains slashing tariffs on imports of EU-made automobiles to 10% from as excessive as 110% underneath a quota of 250,000 automobiles per 12 months.
It represents the most important opening but of India’s beforehand restricted automobile market to European authentic tools producers, with German engineering affiliation VDMA describing it as a “day of celebration for export-oriented mechanical engineering.”
Europe’s Stoxx Vehicles and Components index traded almost 1% decrease on the information, nonetheless, with Volkswagen, BMW and France’s Renault all off by round 1.3% throughout morning offers.
Michael Area, chief fairness strategist at Morningstar, mentioned that in an more and more unstable surroundings, any worldwide commerce deal is nice information.
“That autos are one of many largest exports from the EU to India means this deal could possibly be a fine addition to the European autos business,” Area advised CNBC by electronic mail.
“The Indian auto market is closely dominated by home gamers, which will probably be tough to disrupt, however this provides European auto producers a preventing likelihood,” he added.
The deal may additionally open up a brand new marketplace for luxurious European auto producers, similar to Germany’s Porsche, with value factors “extra inexpensive” for the center lessons, Area mentioned.
‘A lot-needed oxygen’
European carmakers, which have been battling crises on a number of fronts in latest months, are set to obtain tariff reductions in India that none of Delhi’s different buying and selling companions have acquired.
To make sure, India represents the world’s third-largest marketplace for passenger automobiles worldwide and auto business teams anticipate tax cuts, significantly for smaller automobiles, to stimulate the nation’s market considerably in 2026.
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