India, Jan. 28 -- India and the European Union have concluded their long-pending Free Trade Agreement (FTA). For the automotive sector, attention is focused on import duty reductions for European cars, though the real-world impact will be more limited than initial headlines suggest.

Under the FTA, import duty concessions apply only to completely built units (CBUs) or fully imported vehicles. Cars brought into India as completely knocked down (CKD) kits and assembled locally are excluded from the benefit. This distinction matters because most luxury carmakers in India rely heavily on local assembly to manage costs. As a result, the majority of premium cars sold in the country will continue under the existing duty structure.

To prevent a ...