The India-EU Free Trade Agreement (FTA) is set to significantly drive technological innovation in the Indian automotive sector, Mercedes-Benz India Managing Director and CEO Santosh Iyer said on Tuesday.

However, he ruled out any price reductions for the company’s vehicles in the foreseeable future following the deal.

Terming the Indo-EU FTA a historic achievement for India, Iyer said the pact underscores the "rising relevance of the Indian economy at a global stage".

"The FTA is also expected to strongly drive technological innovation and sustainable growth within the Indian automotive sector, with a sharp focus on future mobility. Saying that, the final implications of the FTA can only be determined once the fine print of the agreement is available to us," he added.

On the potential impact of the FTA on vehicle prices, Iyer stated, "With more than 90 per cent of Mercedes-Benz India's sales volume comprising 'Made in India' locally manufactured models, and only around 5 per cent of sales coming via CBU imports from the EU, we do not foresee any price reduction for Mercedes-Benz vehicles from the FTA, in the foreseeable future."

He further emphasised, "We will continue our focus on value addition to customers through local production and competitive pricing, making world-class vehicles in India, for Indian customers."

Mercedes-Benz India also highlighted that the depreciating rupee against the Euro continues to pose a challenge for European carmakers operating in India. The rupee depreciated by 19 per cent in 2025 compared to the euro, a trend expected to offset any benefits from lower duty imports for CBUs in the coming years.

Reiterating the company’s stance on free trade, Iyer said it helps lower trade barriers, leverages the strengths of global economies, and reduces supply chain uncertainties.

"With the Indo-EU FTA, India's economic growth should get a strong boost as borders open up, presenting opportunities in new markets, fostering bilateral trade, and creating job opportunities," he noted.