New Delhi, Jan. 27 -- European carmakers in India have stayed a step ahead of the landmark India-EU free trade treaty, which is expected to slash tariffs on imported fully-made cars.

Companies such as Volkswagen, Mercedes-Benz, UK-based Jaguar Land Rover (JLR), Renault, and BMW already assemble imported kits and sell cars and SUVs in India at a low tariff of 16.5%, while the proposed trade pact reportedly aims to bring down tariffs from 110% to 40%.

Regardless of the tariff benefits from the trade pact, European automakers see local manufacturing as key to demonstrate their commitment to India's growing luxury car market, where demand is poised to accelerate with rising prosperity.

"Having a local manufacturing or assembly presence is ...