Synopsis
The Indian auto components sector expects an acceleration in technology transfer, joint ventures and exports with the proposed free trade agreement with the EU. The deal is expected to boost shipments of electric vehicles and auto parts, reduce import costs and further integrate Indian suppliers into European value chains, positioning India as a key partner.
TEMPSOFINDIA.COMAlthough details of the deal are still awaited, sources said India and the EU have reached mutual concessions based on quotas for vehicles, as well as gradual reductions in customs duties on auto parts.Mumbai | New Delhi: even if Europe has become the main destination for exports Indian Auto Component Manufacturers before the United States, the manufacturers are waiting for the project free trade agreement with the European Union – which should be signed this week – to accelerate technology transfersjoint ventures and exports.
The country’s largest-ever FTA is expected to boost shipments of electric vehicles and auto parts, reduce costs of imported technology and machinery and encourage joint ventures and technology partnerships between Indian automakers and European automakers, industry executives said.
Multinational automakers operating in India could increasingly use the country as an export base for electric and internal combustion engine (ICE) vehicles, while the biggest long-term gains would accrue to auto component suppliers, they said.
The proposed FTA could significantly improve market access for Indian suppliers and accelerate their integration into European value chains, said Prasanth Doreswamy, chairman and CEO of Continental India, a technology and mobility solutions company. “Lower tariffs and clearer trade rules will help Indian suppliers integrate more deeply,” he said.
India exported $3.73 billion worth of auto parts to Europe in the first half of FY26, an increase of about 11 per cent from last year’s $3.36 billion, making it the largest destination ahead of the United States, Asia and Latin America, according to data from the Automobile Component Manufacturers Association of India (ACMA).
Indian auto parts makers face growing uncertainty in the United States, their largest foreign market, due to tariff-related pressures. Industry executives said long-term export orders from the United States have slowed as automakers remain cautious about their future supply plans following higher tariffs imposed under Section 232 and reciprocal tariffs announced last year.
“At first glance, the greatest opportunity is for exports to Europe and integration into the European supply chain,” Doreswamy said.
Vinnie Mehta, chief executive of ACMA, said the deal would help Indian suppliers expand globally. “The India-EU FTA can catalyze the next phase of growth of the Indian auto components industry by enabling technology collaboration, greater export competitiveness and long-term investment flows,” he said.
Indian automakers have already started expanding their European presence. Maruti Suzuki has shipped more than 13,000 units of its e-Vitara electric SUV to 29 countries, mainly in Europe. Royal Enfield and MotoCorp Heroes have also announced plans to expand their electric vehicle footprint on the continent.
Although details of the deal are still awaited, sources said India and the EU have reached quota-based mutual concessions for vehicles, as well as gradual reductions in customs duties on auto parts. Some of these reductions are expected to be implemented immediately, others in the medium term, and a third over a longer horizon of up to 10 years, when duties could fall to zero.
GK Sharma, president, India region at OPmobility, an automotive supplier and technology partner, said the deal could spur new investments and joint development activities.
“Europe is under cost pressure and India offers a competitive manufacturing and engineering base. This agreement strengthens India’s position as a long-term partner in production, technology and joint development,” he said.
India currently accounts for around 3% of global trade in advanced auto parts. The government has urged the industry to increase component exports to $60 billion – up from $20.1 billion in FY23 – and vehicle exports to 25% of total production – up from around 14% in FY23 – by 2030.
