No Defender at Fortuner Prices: The Real Impact of India-EU FTA on Luxury Cars

India: Following the historic Free Trade Agreement (FTA) between India and the European Union, rumors have been circulating that luxury cars imported from Europe will become significantly cheaper in India. Social media enthusiasts suggested that models like the Land Rover Defender could now be available at prices similar to the Toyota Fortuner. However, the reality is very different.

Most Luxury Cars Are Already Assembled in India
The majority of European luxury carmakers—Mercedes-Benz, Audi, BMW, Porsche, Rolls-Royce, Stellantis, Renault, Volkswagen—already assemble over 90% of their luxury models locally (CKD units). This means that the India-EU FTA will have little to no impact on these vehicles. Popular models like the Mercedes C-Class, BMW 3 Series, Audi A4, and certain Range Rover variants are already subject to only 15-17% import duty, so their prices are unlikely to drop further.

The FTA benefits will mainly apply to fully imported cars (CBU units) that are manufactured entirely abroad.

Only Ultra-Luxury Cars Will See Price Drops
The FTA’s impact will be limited to a small segment of ultra-luxury vehicles, roughly 5-10% of the market. Cars such as Mercedes AMG, Maybach, BMW M-Series, Lamborghini, and other high-end sports or supercars may see some reduction in import duties, making them slightly more affordable over time.

The Reality Check
Even though import duties on certain luxury cars may gradually fall—from 110% to 40%, and eventually to 10% over the next 5-10 years—other taxes, including 28% GST and 22% cess, will remain unchanged. Additionally, the FTA sets a quota system, allowing only 2.5 lakh units per year to be imported at reduced duty.

For example, the Toyota Fortuner is manufactured in India, while the Land Rover Defender is fully imported from Europe. Even with lower duties, logistics, registration costs, and local GST will prevent any dramatic price reduction. Consumers should not expect a ₹1.5 crore Defender to cost the same as a ₹50 lakh Fortuner.

Mercedes-Benz India MD Santosh Iyer confirmed in an interview with ET Auto that, except for fully imported CBU units, the FTA will have minimal effect on the Indian luxury car market.

Beware of Misleading Social Media Claims
If you’ve come across Instagram reels or other social media posts claiming that luxury cars will become drastically cheaper, these claims are misleading. The idea that a Defender will now come at Fortuner prices is far from reality.