Local Manufacturing Shields Mercedes-Benz from Immediate Pricing Impact
The India European Union Free Trade Agreement is expected to significantly accelerate technological innovation and sustainable growth in India’s automotive sector, according to Mercedes-Benz India Managing Director and CEO Santosh Iyer. However, the company does not anticipate any reduction in vehicle prices in the foreseeable future following the agreement.Calling the India EU FTA a historic milestone, Iyer said the pact reinforces India’s growing relevance on the global economic stage. He noted that while the agreement is likely to support future mobility initiatives and innovation across the automotive ecosystem, its exact implications can only be assessed once the detailed provisions are available.
High Localisation Limits Exposure to Import Duty Changes
Explaining the limited pricing impact, Iyer said more than 90 percent of Mercedes-Benz India’s sales volume comes from locally manufactured models. Only around 5 percent of sales are sourced through completely built unit imports from the European Union. As a result, the company does not expect the FTA to translate into price reductions for its vehicles in the near term.He added that Mercedes-Benz India will continue to prioritise customer value through strong local production, competitive pricing, and manufacturing world class vehicles in India for Indian customers.
Rupee Depreciation Offsets Potential Duty Benefits
Mercedes-Benz India also highlighted currency pressure as a key challenge for European automakers operating in the Indian market. The rupee depreciated by 19 percent in 2025 against the euro, a trend that is expected to offset any potential gains from lower import duties on CBUs over the next few years.Free Trade to Support Growth and Job Creation
Reiterating the company’s long-standing support for free trade, Iyer said such agreements help reduce trade barriers, leverage the strengths of global economies, and ease supply chain uncertainties. He added that the India EU FTA could provide a strong boost to India’s economic growth by opening access to new markets, strengthening bilateral trade, and creating employment opportunities across sectors.Disclaimer: Due care and diligence have been taken in compiling and presenting news and market-related content. However, errors or omissions may arise despite such efforts.
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