India-UK deal shields mass market segment, a boost for luxury cars
India's new free trade agreement with the UK will slash duties on high-end cars, benefiting luxury brands like Aston Martin and Rolls-Royce. The deal protects the mass-market segment by excluding vehicles under £40,000 from duty concessions. Over five years, customs duties will gradually reduce to 10% for a specific quota of high-end vehicles, promoting collaboration in electric mobility and R&D.
Agencies Representative Image Mumbai: India will slash duties on high-end cars from the United Kingdom under the free-trade deal signed on Thursday, while protecting the mass-market segment where Indian manufacturers are gaining global ground.'Vehicles priced below £40,000 (about Rs 46 lakh including cost, insurance and freight), where Indian automakers are highly active, have been explicitly excluded from any duty concession,' an explanatory note released by the commerce ministry said.'The concessions are targeted largely at large engine capacity ICE vehicles— above 3000 cc petrol or 2500 cc diesel and high-end EVs priced above £80,000 (CIF)...providing a protective shield to the mass-market EV segment,' it said.The deal is likely to benefit luxury car brands such as Aston Martin, Rolls-Royce, McLaren, Lotus, Jaguar Land Rover (JLR) and BMW Mini, which currently face steep import duties of about 110% in India.Under the Comprehensive Economic and Trade Agreement (CETA), India will gradually reduce customs duties to 10% for a specific quota of high-end vehicles over five years. For out-of-quota imports, the duty cut will be limited to 50% over 10 years.
Notably, no duty concessions will be extended to EVs, hybrids, or hydrogen-powered vehicles during the first five years of the agreement.From the sixth year onward, the number of internal combustion engine (ICE) vehicles permitted under the concessional regime will decrease in proportion to the number of EVs imported, with the total import quota capped at 37,000 vehicles over 15 years.JLR, the Tata Motors-owned British marque, welcomed the deal even though many of its products being sold in India will not benefit.'India is an important growth market for our British-built luxury products,' said a JLR India spokesperson.Around 60% of the cars JLR sells in India, including popular models in the Range Rover portfolio – Range Rover, Range Rover Sport, Velar and Evoque – are already locally produced through the CKD route.'Only a limited number of high-value SV models are currently exported from the UK to India and therefore in scope of the FTA,' said the spokesperson.Defender, which is manufactured in Slovakia, too, falls outside its scope.Benefit from the trade deal will depend on brand-wise allocation under the duty concession quota, a spokesperson at a European carmaker said. Clarity on pricing will only emerge once the final legal text is released and approved, the person added.On the components side, Shradha Suri Marwah, president of the Automotive Component Manufacturers Association (ACMA), said the FTA is expected to boost exports, streamline regulatory processes, and foster collaboration in electric mobility, precision engineering, lightweight materials, and R&D.'MSMEs in the sector will benefit from improved access to UK markets and liberalised trade terms,' she said, calling the FTA a 'forward-looking agreement' for the auto ecosystem.
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