India plans to cut import tariffs on European Union cars from as high as 110% down to 40%, part of a new free trade agreement expected to be finalized on Tuesday. The initial cut applies to vehicles with an import price above €15,000, with tariffs slated to fall further to 10% over time.

This move opens the world’s third-largest car market to European automakers like Volkswagen and BMW, which have long faced prohibitive barriers. For India, the deal could boost exports of textiles and jewelry, especially as its own manufacturers face new protection from U.S. tariffs.

The agreement concludes years of stalled negotiations between New Delhi and the 27-nation bloc. Investors will watch for final deal terms and how Indian domestic auto stocks, heavily shielded for decades, react to increased foreign competition in a market selling millions of vehicles annually.