Auto firms hope to drive to Europe taking the FTA route

The India-EU free trade deal could help Indian-made cars enter Europe at lower costs and challenge Chinese dominance.

European Brands Look to India to Counter China

The India-European Union (EU) free trade agreement (FTA) is primed to put India on Europe’s auto map, challenging Chinese dominance.

Several original equipment manufacturers (OEMs) are expected to leverage India’s cost advantage to accelerate the country’s drive into the European car market, positioning Indian-made vehicles as a competitive alternative to Chinese imports.

Renault India Managing Director Venkatram Mamillapalle said the FTA will allow OEMs to export left-hand-drive vehicles from India.

“Today, most of our exports are right-hand-drive models. Now, we can export left-hand-drive vehicles to competitive markets like Europe,” he said, adding that Renault, as a European brand, can capitalise on its India presence under this FTA.

“We can start producing cars locally at competitive prices. With engineering, suppliers, and manufacturing based in India, this gives us a cost advantage and greater competitiveness, especially since exports now face lower duties,” Mamillapalle added. He said that both Europe and India stand to benefit. “We gain through manufacturing, while the EU gains competitiveness, particularly against Chinese players.”

FTA Unlocks New Export Routes for Automakers

Chinese automakers have increased their market share in the EU over the past few years, with estimates putting it at over 6 per cent by the end of 2025 -- almost double the 3 per cent share they held previously.

Regarding imports, Renault plans to focus on high-end vehicles in low volumes through the Chennai port.

Between April and December 2025, Renault India exported 12,841 vehicles, up from 9,687 units the previous year, according to the Society of Indian Automobile Manufacturers.

India’s auto exports are primarily directed to Asian and African countries, along with select Latin American markets.

India's Cost Advantage Takes Aim at Europe

Another European player, Skoda Auto Volkswagen India, also uses India as an export hub, shipping over 31,000 vehicles between April and December last year.

Sources close to the company said the FTA opens up new export opportunities.

“European customers are discerning. Volkswagen Group may consider producing vehicles tailored to their preferences, such as colour or body type, while leveraging India’s low-cost manufacturing to remain competitive,” a source said.

Skoda Auto Volkswagen India declined to comment, citing a lack of clarity on the FTA’s details.

Maruti begins exporting e-Vitara to Europe

Meanwhile, Maruti Suzuki India has already begun exporting its electric Vitara to Europe.

Volumes remain low, but the company aims to export to 100 countries globally. Suzuki Motor Corporation also has a plant in Hungary that can support European supplies.

Mahindra & Mahindra has indicated plans to enter the UK market, leveraging the India-UK FTA to export electric vehicles by 2026-27.

The company did not comment on the India-EU FTA due to a silent period.

Industry analysts suggest Mahindra may use its Banbury, Oxfordshire-based Mahindra Advanced Design Europe (M.A.D.E) studio to develop UK-designed sport utility vehicles for the EU market. 

Feature Presentation: Rajesh Alva/Rediff