File photo for representational purpose.
Credit: Reuters Photo
Shares of India's top carmakers dropped as much as 5 per cent on Tuesday after Reuters reported that New Delhi is set to slash tariffs on European car imports as part of a trade deal, in what would be the most aggressive opening yet of a protected sector.
Shares of Mahindra and Mahindra fell as much as 5.1 per cent to their lowest since August 2025, leading losses on the Nifty auto index, which was down 2.2 per cent.
India plans to cut tariffs on European Union car imports to 40 per cent from as high as 110 per cent as the two sides near a free-trade pact that could be sealed as early as Tuesday, sources told Reuters.
The government has agreed to immediately reduce the tax on a limited number of cars with an import price of more than 15,000 euros (17,739 dollars), the sources said.
Lower import taxes would offer a lift to European automakers including Volkswagen, Renault and Stellantis, as well as luxury brands Mercedes-Benz and BMW.
Indian manufacturers have long opposed such cuts, arguing that they would discourage investment in local production by making imported vehicles more competitive.
European carmakers currently hold a less than 4 per cent share of India's 4.4-million units a year car market, which is dominated by Japan's Suzuki Motor as well as homegrown brands Mahindra and Tata that together hold two-thirds.
Maruti Suzuki India shares fell as much as 2.95 per cent on Tuesday and Tata Motors Passenger Vehicles was down 2 per cent.