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The ratio of electric vehicles of BMW’s portfolio in India by 2030.

The EU-India Free Trade Agreement (FTA), concluded in January this year and expected to be fully approved and signed by the end of the year, will substantially reduce trade barriers between the EU and India. BMW and Skoda have now publicly shared how they think the FTA, and the Iran war, will impact their businesses. Their responses reveal a clear strategic divergence which makes sense once you understand how cars actually enter markets.

With the EU-India FTA becoming active later this year, automotive sector tariffs will be reduced from 110% today to 10% (annual quota: 250,000 vehicles) within 5 years. It is expected that automotive businesses will restructure their India strategies and balance imports and exports, technology development, and overall market access, subject to their current setup.

This is important to distinguish, because there are three ways how cars enter markets:

The choice between these strategies depends on product type, volume, market demand, tariff environment, and the maturity of the local supplier base. They can also be combined as many car makers, for example, run CKD operations for models manufactured in Germany while locally producing others.

One important nuance of the FTA: it will not reduce tariffs for CKD operations. This is a deliberate policy choice to incentivise full local production rather than assembly. That decision shapes how differently the agreement impacts players like Skoda or BMW.

Skoda expects that the FTA will allow the automotive industry to integrate India in their supply chains, increase capacities, and improve technology exchange. Volkswagen Group produces around 180,000 vehicles annually in India (roughly 73,500 of them Skoda) across plants in Pune and Chhatrapati Sambhajinagar. The group sees the FTA as an opportunity to broaden its India portfolio, deepen supply chain integration, and accelerate toward a 5% market share target by 2030, up from approximately 2% today. Four new products are planned for 2026 alone, with EVs and SUVs as the key focus areas.

BMW’s position is fundamentally different. With 95% of its roughly 18,000 annual India sales already assembled locally through CKD operations, the FTA changes very little about its core business. Only around 1,000 vehicles per year are currently imported as CBUs and are at the top end of the luxury segment.

The contrast is revealing. For volume brands with genuine India ambitions, the FTA creates both an opportunity and a pressure: better access to the market, but a clear incentive to localise rather than assemble. Premium brands, having already built local operations, are largely operating within a structure the agreement doesn't fundamentally disrupt — and are instead watching demand-side dynamics, including accelerating EV adoption driven by rising fuel costs, shape their next strategic decisions.

The Iran war however is considered a much larger impact for the premium car maker and India’s automotive industry overall. BMW is already well positioned in the EV market and already sees increasing demand for EVs due to price increases for oil and gas.

Last week, I argued the Iran war would accelerate India's electrotech transition based on Ember’s reporting. BMW's Q1 numbers suggest it already has as BMW’s EV sales grew by 83% year-over-year and reached a market share of over 70% in the premium sector. The company expects EVs to reach 30% of its India portfolio by 2030 overall and confirms the outlook.

India’s automotive market remains highly dynamic and it becomes clear that two developments impact Europe’s automotive strategies in parallel: localisation for volume brands and increasing EV demand in all segments. While premium car makers will most likely continue CKD operations for now, volume brands should consider to increase local production to stay competitive in the market, and to integrate India in their global supply chains. With domestic and East Asian market leaders already taking action and starting exports from India to other regions including Europe, competition in other markets will increase as well.

Sources: Fortune India, Skoda, The Economic Times

India’s infrastructure boom (see prior issues of India Rising) provides substantial opportunities for European businesses. Over the past weeks, several European players in the road infrastructure, energy sector, and aerospace industry reached major milestones indicating the potential ahead:

These recent developments add to the large projects other European infrastructure players such as Siemens secured over the past months. As I’ve shared in previous issues, infrastructure investments by the Indian government are expected to increase substantially and European companies are well positioned to provide expertise in all sectors.

The side effects of these infrastructure developments are not to be underestimated. A newly confirmed USD 1.5 billion investment into a hydro power project in Arunachal, India’s Northeastern region, will not only significantly increase power supply in the region, but improve its accessibility and road infrastructure as well.

Infrastructure investments stabilise domestic growth and are the basis for a country’s economic development. As these are long-term projects with respective compliance and market presence requirements, European businesses must be aware that decisions on tenders are being made now and act accordingly. Especially since domestic giants such as Adani Group, which recently announced to invest USD 72 billion across states and infrastructure sectors, as well.

Sources: Press Insider, The Hindu, Times of India, IndianWeb2

The trend of Indian mobility companies expanding into European markets continues. Ultraviolette Automotive, a Bengaluru-based EV motorbike startup, has announced a strategic collaboration with European distributor Elektrorider to enter Central and Eastern Europe. Standing apart from the commuter-focused scooters that dominate India's domestic market, Ultraviolette focuses exclusively on premium, aviation-inspired electric motorcycles.

The partnership brings the company's total European footprint to 19 countries, facilitating entry into new markets like Hungary, Romania, and the Czech Republic with its flagship F77 platform after already being present in Germany or the UK. Strategically, this expansion reveals that Europe offers a strong product-market fit and good margin potential for premium electric motorbikes. The collaboration with Elektrorider’s established retail and service networks further helps Ultraviolette bypassing the after-sales bottlenecks that can impact new market entrants.

Ultraviolette is backed by heavyweights like TVS Motor Company or Qualcomm Ventures and has already successfully catalyzed India's premium EV segment, forcing legacy automakers to accelerate their own electric transitions. However, this calculated European push underscores the company's broader ambition: shifting from a domestic innovator to a deeply entrenched, globally competitive brand in the performance EV space.

Sources: India Today

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