India-UK Free Trade Agreement: What does it mean for automotive companies and customers?

At a time when US President Donald Trump’s tariffs are creating waves of uncertainty in the global market, many countries are re-evaluating trade barriers. The India-UK Free Trade Agreement comes in at a crucial time, particularly for India’s automotive industry, which has more export-worthy products than ever before.

According to the FTA, Indian automotive tariffs (which are among the highest in the world) will drop from 100 per cent to 10 per cent. All imports and exports will be subject to a quota on either side; however, no specifics regarding the quota have been shared yet. What is clear is that the deal is expected to give a much-needed boost in terms of investments, allowing Indian automakers to make inroads into the UK and European markets.

India-UK Free Trade Agreement: High-end British automobiles to become cheaper

The deal is likely to make the import of high-end UK-built luxury cars much cheaper. This includes brands like Land Rover, Jaguar, Aston Martin, Bentley, and Rolls-Royce, with the latter exporting its vehicles from its sole manufacturing facility in Goodwood, UK. Jaguar Land Rover India currently assembles the Range Rover Evoque, the Range Rover Velar, and the Discovery Sport in Pune, having recently added the Range Rover and the Range Rover Sport to its list of locally assembled cars.

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While the local assembly operations are likely to remain unchanged, JLR will be better placed to increase overall capacity, should the demand for these luxury cars increase. While no automotive concern has stated the exact pricing of these cars, post-FTA, India’s top-end luxury car market, which is witnessing record y-o-y growth and is among the top 10 global markets for most luxury carmakers in the world, is set to receive a big boost. For instance, if a base Bentley Bentayga, imported as a CBU, currently costs ₹4.10 crore, the new tariffs could bring the price to approximately ₹2.25 crore (not including registration, road tax, etc).

India-UK Free Trade Agreement: Big boost for Make-in-India

The India-UK FTA also spells good news for Indian automotive manufacturers who will export greater quantities of India-built cars to the UK, including the Maruti Suzuki Vitara and Toyota Urban Cruiser, according to a report in Autocar UK. While the specifics of the quota are still awaited, it’s fair to assume that the UK government will put a cap of some kind on the number of India-built cars that can be imported into the UK.

For many manufacturers like Tata Motors and Mahindra, a strong fleet of electric vehicles is a tabula rasa of sorts, allowing them to enter new, developed markets without needing the sort of brand equity that comes from decades of manufacturing. “In the EV world, you don’t have to be a brand for 30 years for consumers to accept you,” said Mahindra’s Executive Director and CEO of Auto and Farms Sector Rajesh Jejurikar, at a press conference. Both Tata and Mahindra are expected to roll out plans for expanding their footprint in the UK and European markets.

TVS Motor Company MD Sudarshan Venu echoed similar sentiments. “It (the FTA) creates large opportunities for Indian companies like ours to expand further and access new markets. Our British brand Norton will launch later this year and this agreement will help us scale faster and leverage common supply chains”

India-UK Free Trade Agreement: Components industry receives a boost

According to ACMA (Automotive Component Manufacturing Association of India), India exported auto parts worth ₹1590 crore to the UK and imported parts worth ₹1150 crore. As such, the components industry in India is expected to gain from the FTA, with Bharat Forge, Ashok Leyland, Sona Comstar and MRF among the top gainers in this space. As of today, nearly two-thirds of Nifty Auto Index constituents are trading in the green. The FTA is also expected to strengthen the local automotive supply chain in a major way.