New Delhi: The import duty relaxation for luxury cars from the European Union (EU) under the proposed India-EU free trade agreement will come with riders, including a cap on the number of cars allowed to enter the Indian market from Europe by using the low tariff regime. The commerce ministry is actively considering a proposal to put country-wise caps on the number of cars that can be exported to India by the EU nations.

The move is aimed at protecting the domestic automobile industry from any adverse impact of the availability of cheaper European cars in India, say senior officials in the commerce ministry. In return, India is set to push for lowering of taxes on small cars going to European countries.

"Quantitative restriction on the number of vehicles to be shipped in from EU could be a way out since India-EU FTA is a priority," a senior official in the commerce ministry told...