- Import duties on vehicles are to be gradually reduced from 110 percent to 10 percent.
- The tariff reduction applies to a maximum of 250,000 vehicles per year.
- Spare parts are to become completely duty-free within five to ten years.
The conclusion of the free trade agreement between the European Union and India marks an important step in economic policy. Although the agreement affects numerous industries, the automotive sector is a particular focus. For the motorcycle industry in particular, this opens up new opportunities, but also potential shifts in existing production structures.
India as a key factor in the global motorcycle industry
In recent years, India has become the world’s largest producer of motorized two-wheelers. The domestic market is enormous and serves as an economic base for many local manufacturers. At the same time, Indian companies have long been deeply integrated into the global motorcycle industry.
European manufacturers have been producing small and medium-sized displacement classes in India for years. Conversely, Indian corporations have taken over or financially supported well-known European brands. This close interdependence forms the backdrop for the current trade policy rapprochement.
Tariffs as a key barrier to market entry
Until now, India has levied an import tariff of 110 percent on vehicles produced in Europe. This massive levy is considered one of the main reasons why European manufacturers have increasingly shifted their production to India. Despite these hurdles, European exports of vehicles and vehicle parts to India recently reached a value of around 1.6 billion euros, equivalent to approximately 1.73 billion US dollars.
The free trade agreement now provides for a gradual reduction of customs duties on vehicles to 10 percent. For spare parts, there are even plans to completely abolish customs duties within five to ten years.
Limited scope with a big signal effect
One important restriction concerns the annual quota. The tariff reduction on vehicles only applies to a maximum of 250,000 units per year, regardless of vehicle class or drive type. Measured against the Indian market as a whole, this figure is put into perspective. In 2025 alone, around 20.7 million two-wheelers and around 4.4 million cars were newly registered there.
The quota is therefore hardly relevant for the Indian market itself. For European manufacturers, however, it may enable targeted exports, for example of higher-end models or niche vehicles.
Impact on production and prices in Europe
Parallel to the reduction in customs duties in India, European import duties on vehicles manufactured in India are also to be reduced. This could lead to even more models for the European market being manufactured in India. This development has already begun and is likely to accelerate in the medium term.
This could result in price advantages for motorcycle customers in Europe, as lower customs duties and lower production costs combine. It remains to be seen whether and to what extent these savings will actually be passed on to the end customer.
Long-term change instead of short-term disruption
The free trade agreement is not limited to vehicles, but also covers numerous other industries such as mechanical engineering, chemicals, pharmaceuticals, and agricultural products. Several formal steps are still necessary before it can enter into force, including legal reviews and approval by parliament and the council.
For the motorcycle industry, the agreement does not mean immediate upheaval, but rather a gradual adjustment. However, it underlines India’s growing importance as a production location and sales market and consolidates its role within the global two-wheeler industry.
What does this mean for me as a motorcyclist?
For motorcyclists, the agreement primarily means indirect changes. No noticeable price movements are expected in the short term, as the tariff reductions will be implemented gradually and are also limited in terms of quantity. In the medium to long term, however, more motorcycles produced in India could enter the European market, especially in the small and medium displacement classes. This could lead to greater model diversity and potentially more competitive prices. At the same time, it can be assumed that production sites will continue to shift to India, while development, design, and brand management will often remain in Europe. For individual motorcyclists, everyday life will not change immediately, but the supply structure and pricing could slowly shift over several years.
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