Europe drives India’s 20.5% rise in car exports despite global slowdown

By: Team India Tracker

Spain and the UK emerged as the top destinations, together accounting for over 60% of EV shipments, even though both barely featured in India’s export map a year earlier

Mexico’s move to impose tariffs of up to 50 per cent on cars imported from India and China has unsettled Indian automobile exporters. Mexico is India’s third-largest destination for passenger vehicles, and the decision once again underlines how exposed exporters remain to sudden policy shifts in overseas markets. Yet the setback comes at a moment when India’s auto exports are finding fresh traction elsewhere, particularly in Europe.

Between April and October of FY26, India’s car exports rose 20.5 per cent year-on-year to $6.23 billion. The increase stands out in a period marked by slowing global demand and growing trade barriers. Europe, until recently a marginal buyer of Indian vehicles, contributed disproportionately to this rise. Exports to the continent more than doubled to $318 million from $140 million a year earlier, pushing Europe’s share of India’s motor vehicle exports to just over 5 per cent from 2.7 per cent.

The absolute numbers remain modest, but the composition of exports is changing more rapidly. Electric vehicles, which barely figured in India’s export basket a few years ago, are beginning to assume a visible role. EV exports climbed from just $1.55 million in FY21 to about $80 million in FY25. In the first seven months of FY26, they jumped nearly fourfold to around $248 million.

As a result, electric vehicles now account for a little over 4 per cent of India’s car exports, up from less than 1 per cent in the previous year. Hybrid vehicles are excluded from these figures and remain a negligible part of India’s export profile. The shift suggests that market forces, rather than policy announcements alone, are driving change.

The reorientation is most evident in destination data. In FY25, India’s EV exports were concentrated in nearby markets. Nepal alone absorbed nearly 45 per cent of shipments, while Indonesia and Japan together made up another 30 per cent. Europe accounted for only a small fraction, indicating that exports were opportunistic rather than strategic.

That pattern has changed sharply in FY26. More than 83 per cent of India’s EV exports between April and October went to Europe. Nepal’s share dropped to just over 10 per cent, while shipments to Indonesia and Japan all but vanished. Indian exporters appear to be responding to demand created by stricter emissions norms, consumer incentives and a growing market for smaller, lower-priced electric cars in Europe.

The shift is reflected in the export mix. Nearly two-thirds of the cars shipped from India to Europe during this period were electric. Spain and the United Kingdom emerged as the leading destinations, together accounting for over 60 per cent of EV shipments to the region. Both markets had barely featured in India’s EV export map a year earlier.

Despite the rapid growth, India’s presence in Europe’s EV market remains limited. In 2024, more than half of the European Union’s EV imports came from China, whose share has expanded dramatically over the past five years. South Korea and Japan also command far larger slices of the market. Indian exporters, though gaining ground, face competition from established players with stronger brands and more integrated supply chains.

Europe’s experience may also be hard to replicate elsewhere. India’s traditional export markets in Africa and Latin America continue to rely heavily on petrol and diesel vehicles. Weak charging infrastructure, unreliable power supply and higher upfront costs have slowed EV adoption in these regions. Indian manufacturers still compete there largely on affordability and durability.

Mexico’s tariff action highlights the risks of relying too heavily on a small number of markets. Europe’s growing appetite for Indian electric cars offers a partial cushion, but it is not yet a solution. Turning this momentum into a lasting shift will require trade agreements, financing mechanisms and infrastructure partnerships that extend beyond a few developed economies.

For now, Europe provides relief. Whether it becomes a foundation will depend on how quickly India can broaden both its markets and its electric ambitions.