FTA will be one of the biggest game changers: Santosh Iyer, MD and CEO, Mercedes-Benz India

Santosh Iyer, MD and CEO, Mercedes-Benz India

• FTAs seen as key to boosting India's global economic role
• India's auto exports to Europe surpass imports: Mercedes-Benz CEO
• India prioritizes sustainable growth and decarbonization

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India’s string of Free Trade Agreements (FTAs) will emerge as transformative catalysts for the country’s economic future, enabling domestic industries to compete and collaborate more deeply with developed markets, said Santosh Iyer, Managing Director and CEO of Mercedes-Benz India, at the News18 Rising Bharat Summit.

“FTAs are not about duty reduction. We have always advocated open borders and that is the fundamental reason for global economic growth. The real potential of India is to be able to participate in developed economies and we have prepared India already,” Iyer said.

Beyond Tariffs: A Structural Opportunity

According to Iyer, the benefits of FTAs go well beyond lower import duties. He emphasized that India’s automotive ecosystem is already globally competitive, particularly in auto components.

“The automotive ecosystem is very strong. The balance of trade of auto components to Europe is positive for India. We are exporting to Europe more than importing from there,” he noted.

He highlighted that FTAs could unlock significant upside not just in manufacturing but also in intellectual capital movement. With clearer investment protection frameworks for European companies operating in India, the agreements could accelerate capital expenditure (capex) inflows and sustain growth momentum.

“There is a clear discussion about protection of investments for European companies in India, that also means more capex and more growth momentum. FTA will be one of the biggest game changers in the next couple of months if not years,” Iyer added.

India’s Growth Model vs China

Drawing comparisons with China, Iyer said the two economies have fundamentally different growth models.

“China’s growth was state-led with a lot of capex and subsidies. Targets for production were set. Whereas India’s growth is consumer economy-led. China has overcapacity now. It is more structural in India — a bit slower than imagined — but the runway is there,” he explained.

He pointed to car penetration levels to illustrate India’s long-term growth potential. India currently has around 40 cars per 1,000 people, compared to China’s 250 and Germany’s 600. However, Iyer cautioned that such metrics can be misleading if viewed in isolation.

“The biggest change point in the last 20 years is decarbonization,” he said. “China did not have that agenda as much as what India has for growth.”

Decarbonization and Strategic Patience

Iyer stressed that sustainable growth is non-negotiable for India. Failure to decarbonize the auto industry while expanding could result in a public health crisis, rising oil import bills, and further pressure on the rupee.

“If we don’t decarbonize the industry while growing, we will actually have a crisis on public health and on oil import bill and on rupee which is already under a lot of stress,” he warned.

Describing the company’s approach as “strategic patience,” Iyer said India’s market structure has evolved significantly over the past two decades. The shift from predominantly low-priced vehicles to higher-value premium offerings underscores changing consumer aspirations.

“From a low-selling, cheaper cars to today our average selling price is coming to Rs 1 crore,” he said.

India has also emerged as one of the top five global markets for the ultra-luxury Maybach brand, reflecting rising demand at the higher end of the automotive spectrum.

“If you look at just the volume from a single prism, maybe that would not be right. But structurally, we have a very positive trend. We are quite optimistic,” Iyer concluded.