India-UK FTA: Luxury cars will now be cheaper in India. The India-UK FTA will bring a big change

The free-trade agreement (FTA) between India and the United Kingdom (UK) can prove to be beneficial for the sale of luxury cars. After this agreement, the tariff on these cars will be reduced by 50% in 10 years. At the same time, Jaguar Land Rover (JLR) will get the most benefit from this.

India-UK FTA: The free-trade agreement (FTA) between India and the United Kingdom (UK) can prove beneficial for the sale of luxury cars. After this agreement, the tariff on these cars will be reduced by 50% in 10 years. At the same time, Jaguar Land Rover (JLR) will benefit the most from this. Along with this, companies like Aston Martin (which sold less than 25 cars in India in 2024), Rolls Royce and McLaren will also benefit from this.

Let us tell you that JLR manufactures 60% of its cars in India. These cars are made as completely knocked down (CKD) units. The company is preparing to start local assembly in the Tamil Nadu plant next year. Currently, JLR manufactures Range Rover, Range Rover Sport, Velar and Evoque models in Pune plant in India. Only 15% custom duty is levied on CKD units.

Plans are also being considered to assemble JLR's Defender car in India. Currently, this car is manufactured at the company's Slovakia plant, which does not fall under the scope of India-UK FTA.

Luxury cars may become cheaper by up to 50%

Quota and duty structures vary depending on the engine type. Experts believe that the prices of British luxury cars could fall by 50% or more. However, the industry is still understanding the details of the agreement. McLaren has sold around 50 vehicles in India so far from 2022, while Rolls Royce sold around 60 vehicles in 2023 (new data is not available yet).

Response from companies

A JLR spokesperson said, "We welcome this FTA. Over time, this agreement will open the way for lower tariffs for JLR's luxury vehicles in the Indian market. India is an important market for our British-made products and there is huge growth potential here."

Regarding changes in prices of imported vehicles, a UK spokesperson said no decision has been taken yet.

Range Rover's global managing director, Martin Limpert, said in a recent interview that the Defender has been a very successful car in India, so it makes sense for us to consider local production. Currently, some of JLR's high-value sports vehicles are brought to India as completely built units (CBUs) and will directly benefit from the FTA.

Mahindra and Maruti also benefit

Companies that sell both CKD and CBU vehicles will benefit from this agreement.

Indian auto companies such as Mahindra & Mahindra and Maruti Suzuki, which have plans in Europe, will also benefit from this. Maruti currently sells the eVitara in the UK.

What did the Mahindra Group CEO say?

Anish Shah, CEO and Managing Director, Mahindra Group, said, "We believe that such cross-border partnerships boost economic prospects, create good jobs and accelerate future-oriented sectors such as green mobility, clean energy, digital technology and advanced manufacturing. As Indian industry goes global, we are ready to make a meaningful contribution to this new chapter of the UK-India partnership."

ACMA welcomes the agreement

The Automotive Component Manufacturers Association of India (ACMA) welcomed the agreement and expressed hope that it will strengthen market access, technology partnership and value chain integration between the Indian and UK automobile industries.

ACMA President Shraddha Suri Marwah said that this deal will greatly benefit the Indian auto component sector. This will lead to new export opportunities, easier regulatory processes and progress especially in areas like electric mobility, precision engineering and lightweight materials.

PC:Money Control