BMW Group India has welcomed the potential reduction in customs duty on imported cars under the India-EU Free Trade Agreement (FTA), saying it could help expand India’s luxury car segment, which currently makes up only about 1 per cent of the overall passenger vehicle market.

Hardeep Singh Brar, President and CEO of BMW India, said the FTA would be a historic milestone, enabling growth in trade, technology exchange, and innovation between India and the EU. “From an automotive perspective, balanced provisions under the FTA could stimulate demand in the luxury segment while strengthening supply chain integration, which is especially important in the current geopolitical context,” he added.

Brar noted that if customs duties on completely built units (CBUs) are reduced, it would allow luxury carmakers to broaden their product portfolios, introduce globally popular models, and test new offerings. Currently, CBUs account for about 5 per cent of BMW India’s sales. Increased demand could also support deeper localisation of vehicles over time.

At present, imported cars priced below USD 40,000 attract a basic customs duty of 70 per cent, while those above USD 40,000 face an effective duty of 110 per cent. Brar said easing these tariffs would benefit consumers without affecting the mass market, calling it a win-win for India and the EU. He added that the FTA signals strong confidence in India’s long-term growth story. “India is not only a large market but also a future-ready economy supported by reforms and policies aimed at building a globally competitive ecosystem,” he said.