India-UK FTA Paves Way for Automotive Trade Expansion
A landmark Free Trade Agreement (FTA) between India and the UK is set to revolutionize the automotive industry, reshaping how vehicles are traded between the two nations. According to a recent press release from the British government, India will significantly reduce its tariffs on UK-origin cars, lowering them from over 100% to just 10% for a specified quota of high-end models. Initially applicable to Internal Combustion Engine (ICE) vehicles, this tariff reduction will later extend to electric and hybrid cars. In return, the UK will offer similar access to Indian EVs and hybrids. This reciprocal arrangement aims to enhance bilateral trade while promoting sustainable mobility solutions.
This agreement comes as part of broader negotiations aimed at fostering economic collaboration. Notable benefits include India allowing the importation of up to 22,000 electric cars annually from the UK under the reduced tariff rate. Conversely, India plans to export affordable and mid-range EVs to the UK market, targeting mass-market segments. The deal not only focuses on finished vehicles but also encompasses auto parts, though specifics remain undisclosed until the legal text is finalized in the coming months.
Jaguar Land Rover (JLR), currently overshadowed by competitors such as Mercedes-Benz and BMW in India, stands poised to gain the most from this FTA. With several luxury models sourced from the UK, including the Discovery Sport, Range Rover Evoque, Velar, Sport, and Jaguar F-Pace, JLR imports these vehicles in knocked-down kits for local assembly. As the company transitions towards electrification with upcoming models like the Range Rover Sport Electric and Range Rover Electric, it can leverage the FTA's provisions to expand its presence in India. Other British automakers, such as Aston Martin, Bentley, Lotus Cars, and Rolls-Royce, are similarly positioned to benefit from the favorable terms outlined in the agreement.
On the Indian side, Maruti Suzuki and Mahindra are among the frontrunners expected to capitalize on this opportunity. Maruti Suzuki has already announced plans to export the Suzuki e Vitara from its Hansalpur factory in Gujarat to the UK later this year. Meanwhile, Mahindra is exploring entry into the UK market with its new 'Born Electric' series, featuring models like the BE6 and XEV 9e SUV coupes, alongside potential launches of three additional EVs.
The Society of Motor Manufacturers & Traders (SMMT) expressed optimism about the FTA, emphasizing its importance in delivering substantial tariff reductions for UK automotive exports. SMMT Chief Executive Mike Hawes highlighted the need for fair origin requirements and an effective framework governing future bilateral trade in electrified vehicles.
As both nations move closer to finalizing the legal aspects of their FTA, the automotive sector anticipates significant growth and innovation. This partnership promises to strengthen ties between India and the UK, opening new avenues for manufacturers and consumers alike. Through strategic cooperation, both countries aim to lead in the global transition toward sustainable transportation.