European automakers may initially assess the Indian market by shipping approximately 5,000 units across various models before considering local production, Union Minister Piyush Goyal said on November 10th.

He added that original equipment manufacturers (OEMs) plan to use India as a manufacturing base.

This approach could be adopted by European OEMs following the finalisation of the free trade agreement (FTA) between India and the European Union, which is expected to be officially signed in December this year. The agreement is expected to provide European automakers with greater access to the Indian market while allowing Indian manufacturers to explore opportunities in Europe.

"When we negotiated the FTA, we of course gave them an opportunity to sell their cars to India. But when I engage with the auto industry of Europe, they recognise that what we need market access in India is only to test the market," Commerce and Industry Minister Goyal said during the Bharat Mobility Curtain Raiser.

European automakers view access to the Indian market through the FTA as an opportunity to assess consumer demand before making manufacturing investments.

"Maybe we (EU) will send five models and see which one has an appetite in India. Once we finalise what has appetite in India, then we will bring that car manufacturing to India and not only for India, but for the world, because economies of scale will play out," he further added.

European manufacturers are also facing challenges in competing in global markets due to high manufacturing costs and regulatory requirements in their home markets.

"Europe's car production declined from 50.4 million in 2007 to 14.5 million in 2019 and further to 11.5 million in 2025. European manufacturers are now realising that high manufacturing costs and regulatory burdens make it difficult to compete in global markets," he said.

Manufacturing opportunities

Manufacturing in India could provide European companies with access to the domestic market while enabling them to achieve the production scale and cost competitiveness required to serve international markets.

The development could also create business opportunities for Indian automotive component manufacturers and suppliers across sectors such as steel, rubber, electronics and other manufacturing segments.

"Every component manufacturer, you can look at a scale going beyond the Indian market globally when these companies look at India," he said.

Goyal also said that Italy is seeking to expand its partnerships with India across sectors including automotive, machinery, chemicals and pharmaceuticals.

"So even Italy is already planning greater partnerships with all of you in automotive," he said.

Separately, he said that Indian exports of goods and services are on track to achieve the US$ 1 trillion target for the current fiscal year. India's exports of goods and services reached approximately US$ 480 billion in the first half (April to September) of FY27.