India reportedly lowering EU car import tariffs to 40%

Investing.com -- India plans to reduce tariffs on cars imported from the European Union to 40% from as high as 110%, as part of a free trade agreement that could be announced as early as Tuesday, CNBC reported on Monday.

The government of Prime Minister Narendra Modi is said to has agreed to immediately lower taxes on a limited number of cars from the 27-nation bloc with an import price exceeding €15,000 ($17,739).

The tariff will be further reduced to 10% over time, making the Indian market more accessible to European automakers like Volkswagen, Mercedes-Benz and BMW.

India and the EU are expected to announce the conclusion of their long-running trade negotiations on Tuesday. After the announcement, both parties will finalize details and ratify the deal.

The agreement could boost bilateral trade and increase Indian exports of products such as textiles and jewelry, which have faced 50% U.S. tariffs since late August.

India represents the world’s third-largest car market by sales, following the U.S. and China. However, its domestic auto industry has historically been heavily protected, with current tariffs on imported cars at 70% and 110%.

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