India-UK Free Trade Agreement to Slash Import Duties on Luxury British Cars and Bikes

The India-UK Free Trade Agreement (FTA) is set to have a significant impact on the automotive sector, particularly for luxury British cars and motorcycles. With the reduction of import duties as a key component of the agreement, renowned British automakers like Bentley, Rolls-Royce, Triumph, and Jaguar are poised to see a decrease in costs, making their vehicles more affordable for Indian consumers. Currently, high import tariffs often make luxury models prohibitively expensive in India, but the new FTA aims to address this barrier. As a result, Indian buyers can expect to access a broader range of premium vehicles at more competitive prices. This agreement not only promises to boost sales for British brands but also reflects the growing economic collaboration between the two nations, potentially fostering a stronger trade relationship and encouraging future investment in India’s automotive industry.

India-UK Free Trade Agreement: How It Impacts the Indian Automotive Market

Currently, India imposes import duties of over 100% on certain passenger vehicles, but under the forthcoming India-UK Free Trade Agreement (FTA), these tariffs on British cars and SUVs are set to be significantly reduced. The new agreement will lower the duties to just 10%, though the reduced rate will apply only to a specified quota of imports, as stated by the UK Department for Business and Trade.

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An official statement from the Indian Government reveals that the FTA will eliminate tariffs on approximately 99% of trade lines, encompassing nearly the entire trade value. This is expected to unlock significant potential for enhanced trade between the two countries.

While the specifics of the import quota remain unclear, it is anticipated that the lower tariffs will apply to a limited number of UK-manufactured vehicles. Nonetheless, this will result in a dramatic reduction of over 90% in the import duties on British vehicles entering India, which should lead to a significant decrease in their prices.

Several luxury automobile brands, including Rolls-Royce, Jaguar Land Rover (JLR), Bentley, Mini, and Aston Martin, already have a presence in India. Many of these vehicles are imported as completely-built-up (CBU) units, which typically come with steep price tags. JLR assembles some models, like the Range Rover, locally, but still imports select variants and limited editions. The FTA is also likely to benefit two-wheeler manufacturers such as Triumph and Norton.

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The Indian government further highlighted in its press release that the FTA will positively affect the manufacturing sector, particularly in industries requiring significant labour and technological input. It is expected to create new export opportunities for India’s automotive sector, particularly in the production of auto components and engines.