India EU Trade Pact to Boost Domestic Auto Manufacturing

01 Jun 2026 CW Team

Jain indicated that the auto sector posed challenging issues during negotiations because of high Indian import duties, but that those challenges were converted into structured opportunities within the agreement. India offered quota-based, long phasing of concessions so that European producers gain market access while the domestic industry retains adequate protection. He noted the pact will reduce duties gradually, bringing tariffs to 10 per cent from 110 per cent for zero point two five million (mn) vehicles a year, a quota that is over six times the amount offered to the UK.

On social security agreements with EU members, Jain explained that India already has pacts with 14 out of 27 member states, with seven under negotiation and six more planned. He said these arrangements prevent double social security contributions by Indian professionals working for a limited period in EU countries and allow them to retain benefits that would otherwise be inaccessible. The government has therefore created a facilitative mechanism to enter into additional bilateral social security agreements with member states.

Jain further observed that the EU has more than 40 free trade agreements covering some 70 nations, presenting opportunities for Indian exporters to benefit from those arrangements. FICCI Secretary General Anant Swarup noted that the EU accounts for about 12 per cent of India's total merchandise trade and that the immediate task is to convert such agreements into practical gains for exporters, micro, small and medium enterprises and service providers. The overall expectation is greater investment and deeper engagement in global value chains.

The India-European Union free trade agreement, whose negotiations concluded on January 27, is expected to attract greater investment into India and to boost automobile manufacturing, Additional Secretary in the commerce ministry Darpan Jain said while addressing a conference organised by the industry chamber Ficci. The official said the pact may come into force from next year and will help integrate India into the EU value chain. He added that this is intended to expand manufacturing in India and increase exports to third countries. Jain indicated that the auto sector posed challenging issues during negotiations because of high Indian import duties, but that those challenges were converted into structured opportunities within the agreement. India offered quota-based, long phasing of concessions so that European producers gain market access while the domestic industry retains adequate protection. He noted the pact will reduce duties gradually, bringing tariffs to 10 per cent from 110 per cent for zero point two five million (mn) vehicles a year, a quota that is over six times the amount offered to the UK. On social security agreements with EU members, Jain explained that India already has pacts with 14 out of 27 member states, with seven under negotiation and six more planned. He said these arrangements prevent double social security contributions by Indian professionals working for a limited period in EU countries and allow them to retain benefits that would otherwise be inaccessible. The government has therefore created a facilitative mechanism to enter into additional bilateral social security agreements with member states. Jain further observed that the EU has more than 40 free trade agreements covering some 70 nations, presenting opportunities for Indian exporters to benefit from those arrangements. FICCI Secretary General Anant Swarup noted that the EU accounts for about 12 per cent of India's total merchandise trade and that the immediate task is to convert such agreements into practical gains for exporters, micro, small and medium enterprises and service providers. The overall expectation is greater investment and deeper engagement in global value chains.

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