Full Breakdown
India-EU Free Trade Agreement Draft Sets Steel Export Quotas and Car Tariff-Rate Quotas
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Core Provisions of the Draft Deal
The EU’s draft free-trade agreement with India allocates a steel export quota of 1.64 million tonnes per year and a tariff-rate quota (TRQ) for 100,000 completely built-up (CBU) cars in the first year, rising to 160,000 units by year 10. The steel quota is split between an FTA-linked component of 694,853 tonnes and a most-favoured-nation (MFN) component of 946,616 tonnes. Cars priced below €15,000 receive no duty concession; higher-priced vehicles see duties fall to 10 % by year 5. Concessions for battery-electric and plug-in hybrid models start in year 5, expanding from 20,000 units to 90,000 units by year 14.
Background & Context
The steel quotas follow the EU’s Steel Overcapacity Regulation (effective July 1), which sets 18.3 million tonnes of duty-free import quotas for the EU and a 50 % duty on excess imports. India currently ships about 4 million tonnes of steel to the EU, so the country-specific quota secures a modest but protected share.
In the automotive sector, the draft tariff schedule reflects India’s aim to shield domestic manufacturers from low-priced European models while allowing greater access for premium vehicles.
Data & Statistics
| Category | Quantity | Key Details |
|---|---|---|
| Steel – total quota | 1.64 million tonnes | 16 product categories |
| – FTA component | 694,853 tonnes | Assured access for India |
| – MFN component | 946,616 tonnes | Competitive access |
| Car TRQ – Year 1 | 100,000 units | ICE and non-plug-in hybrids |
| – Year 5 | 160,000 units | Gradual increase |
| – Price band €15k-€35k | Duty 110 % -> 35 % -> 10 % | 34,000 units allocated |
| – Price band > €35k | Duty 66 % -> 30 % -> 10 % | 33,000 units each for €35k-€50k and >€50k |
| EV & other tech TRQ | Starts Year 5 | Vehicles >= €20k |
| – Year 5 quota | 20,000 units | In-quota duty 30 % |
| – Year 10 quota | 50,000 units | Duty 10 % |
| – Year 14 quota | 90,000 units | Duty 10 % |
Official Statements & Responses
- The European Commission sent the proposal to the European Council, noting a possible signing by the end of 2026 and implementation in 2027.
- The Indian Council for Research on International Economic Relations (ICRIER) said higher-value steel could lower CBAM taxes and urged combined Production-Linked Incentives, R&D funding, and concessional financing for MSMEs.
- The Global Trade Research Initiative (GTRI) observed that the EU becomes the second major partner after the UK to secure automotive concessions from India, hinting that Japan and South Korea may seek similar terms.
Timeline
- July 1 – EU Steel Overcapacity Regulation in force.
- January 27 – India and the EU announce conclusion of negotiations.
- End 2026 – Expected signing by the European Council.
- 2027 – Anticipated entry into force.
- Year 1–5 – Progressive reduction of car duties and expansion of car TRQ.
- Year 5 onward – Introduction of EV and other technology concessions.