Shares of India’s top carmakers like Mahindra and Mahindra (M&M), Maruti Suzuki India, Tata Motors and Hyundai fell up to 5 per cent on Tuesday amid fears that the India EU FTA, which is scheduled to be signed later in the day, may see slashing of tariffs on cars imported from Europe.
Shares of Mahindra and Mahindra fell as much as 5.1 per cent to their lowest level since August 2025, leading losses on the Nifty auto index, which was down 2.2 per cent. Hyundai Motor India shares fell 4.5 per cent, while Maruti Suzuki India shares were down as much as 3 per cent, and Tata Motors Passenger Vehicles lost 2 per cent of its value.
India plans to cut tariffs on European Union car imports to 40 per cent from as high as 110 per cent as the two sides near a free trade pact that could be sealed as early as Tuesday, Reuters reported. The government has agreed to immediately reduce the tax on a limited number of cars with an import price of more than 15,000 euros ($17,739), the report said.
Lower import taxes would offer a lift to European automakers including Volkswagen, Renault and Stellantis, as well as luxury brands Mercedes-Benz and BMW.
Indian manufacturers have long opposed such cuts, arguing that they would discourage investment in local production by making imported vehicles more competitive.
European carmakers currently hold a less than 4 per cent share of India’s 4.4 million units a year car market, which is dominated by Japan’s Suzuki Motor, as well as homegrown brands Mahindra and Tata, which together hold two thirds of the market.
Emkay Global analysts said if the India EU Free Trade Agreement is similar to the India UK FTA, duty revision would have minimal or no impact on Indian PV OEMs, as CBU imports are restricted to super luxury models priced between Rs 1 crore and Rs 1.5 crore.
Premium PV OEMs like BMW, Mercedes and Audi already have assembly operations for over 70 per cent of their volumes in India.
“A potential reduction in the around 8 per cent import duty on motorcycles in the EU from India would be a positive for key two wheeler exporters like Bajaj Auto (KTM and Triumph) and TVS Motor (BMW and Norton), as EU markets levy country specific VAT on bike value and duty, amplifying effective landed cost,” Emkay said.
