India-UK Free Trade Agreement slashes import duties on British luxury vehicles
India and the United Kingdom have concluded a long-awaited Free Trade Agreement that is set to significantly lower import tariffs on luxury cars and SUVs manufactured in the UK, potentially reshaping the premium automotive market in India.
Tariffs on UK-Built Vehicles Slashed
One of the key outcomes of the FTA is a drastic reduction in customs duties on completely built-up vehicles imported from the UK. The current import duties, which often exceed 100 percent, will be brought down to just 10 percent under a quota system. While exact details of the quota have not been disclosed, the new policy is expected to lead to meaningful price reductions on UK-made luxury vehicles in India.
This development is likely to benefit several high-end carmakers including Jaguar Land Rover, Bentley, Rolls-Royce, Aston Martin and MINI. Most of these brands currently ship CBUs into India, making their vehicles significantly costlier for Indian buyers.
Wider Impact on the Auto Sector
The Indian government has stated that the FTA will extend benefits beyond the premium car segment. By opening up avenues for lower tariffs and improved access to the UK market, the deal is also expected to stimulate growth in India’s auto component and engine manufacturing sectors. This may help Indian suppliers become more integrated with global supply chains, especially those linked to the UK automotive ecosystem.
Luxury automaker JLR, a subsidiary of Tata Motors, already assembles some models like the Range Rover in India. However, many of its exclusive and special-edition models are still imported. The FTA could allow JLR and similar brands to broaden their offerings at more competitive price points.
Boost for British Motorcycle Brands
The agreement may also accelerate the market entry of British two-wheeler manufacturers. Notably, Norton Motorcycles, which is owned by India’s TVS Motor Company, is expected to benefit from the improved trade framework. TVS has indicated that the FTA will help fast-track Norton’s debut in India, leveraging common supply chains and easing regulatory pathways.
Challenges and Future Considerations
Despite the optimism, industry watchers anticipate that the agreement may come with trade-offs. UK automotive associations acknowledge that while the deal marks a step forward, it may not result in comprehensive market access for all vehicle types. Areas like electric vehicle trade are still expected to evolve as part of future bilateral engagements.
Nevertheless, the FTA represents a significant shift in India’s automotive import policy, particularly for high-end and luxury vehicles. Consumers stand to gain from lower prices, while manufacturers could explore new market dynamics under a more liberalized trade regime.
