Mahindra & Mahindra leads Nifty Auto slide with 5.1% plunge; domestic giants brace for heightened competition under landmark India-EU FTA.
By PingTV News Desk NEW DELHI | January 27, 2026
The Indian automotive sector witnessed a massive sell-off today as shares of domestic giants plummeted following the official signing of the landmark Free Trade Agreement (FTA) between India and the European Union. The pact is set to drastically reduce import duties on European vehicles, signaling the end of the “protected era” for Indian carmakers.
The Nifty Auto index slid over 2.2% in intraday trade, with Mahindra & Mahindra (M&M) emerging as the biggest laggard, crashing 5.1% to its lowest level since August 2025. Other majors followed suit: Hyundai Motor India dropped 4.5%, Maruti Suzuki fell 3%, and Tata Motors slipped 2%.
Breaking the 110% Tax Wall
Under the final terms of the agreement signed today in New Delhi, India has agreed to an aggressive reduction of import tariffs to foster deeper economic ties:
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Immediate Cut: Import duties on cars priced above €15,000 (approx. ₹16.5 lakh) will be slashed from the current peak of 110% to 40%.
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The 10% Roadmap: Tariffs will eventually drop to a mere 10% over the next five years, subject to an annual quota of roughly 250,000 vehicles.
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Component Liberalization: Duties on automotive parts are expected to be phased out, aiding European supply chain integration in India.
Why Investors are Panicking
The market’s anxiety stems from increased competition in the high-margin SUV and premium segments. Analysts at Goldman Sachs have specifically flagged a potential 1.9% impact on Mahindra & Mahindra’s profitability, given its heavy exposure to the ₹23 lakh+ price bracket with models like the XUV700 and Scorpio.
“For years, Indian carmakers operated behind a protective wall of 110% duties,” noted one market analyst. “The sudden shift to 40%, and eventually 10%, means European brands like Volkswagen, BMW, and Mercedes can now price their global-spec models much more competitively against local flagships.”
The “Make in India” Shield: Why EVs are Safe
In a strategic win for the “Make in India“ initiative, Battery Electric Vehicles (EVs) have been excluded from these tariff cuts for the first five years. This “safe zone” is designed to protect the multi-billion dollar investments made by Tata Motors and Mahindra in their nascent EV ecosystems, providing a critical window to achieve scale before facing direct competition from European EV giants.
A New Era for Indian Trade
While the auto sector is feeling the heat, the broader economy is expected to benefit. The deal provides Indian exporters in textiles, gems, and pharmaceuticals duty-free access to the European market—a move expected to double bilateral trade by 2032.
As the India-EU Summit concludes today, the Indian auto landscape stands on the brink of its most significant transformation since the 1991 liberalization.
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