European automakers accelerate India localisation ahead of EU trade deal

Subscribe to enjoy similar stories. 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 a critical demonstration of long-term commitment. It gives customers, suppliers, and dealer partners confidence that a carmaker is invested in India beyond opportunistic imports, and it aligns with the government’s broader objectives of localisation, employment and supply-chain development," Vinay Piparsania, founder of Millenstrat Advisory and Research, an auto-focused consultancy, said.

"Most European automakers have spent years building local ecosystems, and as market access expands, they are more likely to deepen these investments rather than retreat from them." Germany's Mercedes-Benz announced this month that it will begin local assembly of its luxury sports utility vehicle (SUV) Maybach GLS in India, making it the only market outside the US to produce the vehicle locally. It was joined by peer Volkswagen Cars, which announced that it has rolled out the locally-assembled Tayron R-Line from its plant in Chhattrapati Sambhaji Nagar just a year after its global launch.