Union Commerce and Industry Minister Piyush Goyal said that European automobile manufacturers could set up production in India after testing demand for a limited number of models under the India-EU Free Trade Agreement (FTA), at the Curtain Raiser of Bharat Mobility Global Expo 2027 in New Delhi. He said manufacturing in India would give companies economies of scale, access to the domestic market and competitive pricing for global sales.
Goyal said European manufacturers, which have traditionally focused on international markets, are increasingly recognising the challenge of competing globally given Europe’s manufacturing costs and regulatory burden.
Once they identify models with adequate demand, he said, they could produce in India for the domestic market and for export. He said this would create opportunities for Indian component makers, startups, and the steel and rubber industries, and urged industry to capture them before other countries do.
Goyal cited the size of the domestic market, saying one million cars were sold during Navratri and around 70,000 over the two days of Dhanteras. He said several Japanese companies were considering billion-dollar investments in India to manufacture for global markets. He also said India should aspire to sell 10 million passenger vehicles domestically, with exports additional to that.
He said the EU’s 27-nation bloc was expected to open to Indian businesses at zero duty by March or April. India is also negotiating with seven to eight other countries, he said.
What the Agreement Provides
India and the EU announced the conclusion of FTA negotiations on 27 January 2026. The agreement gradually reduces duties on European cars from 110 per cent to as low as 10 per cent, within an annual quota of 250,000 vehicles.
The Commerce Ministry said the quota-based package would allow EU carmakers to introduce models in higher price bands. It said the package would also open possibilities for Make in India and for exports from India, and that the EU market would open to India-made vehicles.
The agreement’s rules of origin for automobiles are described as stringent, with high value-addition criteria. The government has also said the agreement includes a bilateral safeguard mechanism.
Under it, India can raise duties to the most-favoured-nation level on goods whose imports surge because of tariff cuts. A safeguard measure can run for up to four years and is available during a 22-year transition period.
The Ministry of External Affairs said in late October that legal scrubbing of the text was continuing and that no signing date had been announced. Under the agreement, it enters into force on the first day of the second month after both sides exchange notifications that their internal legal procedures are complete.
The terms published in January are subject to legal revision.