The historic India-UK free trade agreement is welcomed by the Indian auto industry.
The recently concluded India-UK Free Trade Agreement (FTA) has been enthusiastically embraced by the Indian auto sector, which has called it a historic and revolutionary shift in the world economy.
Anish Shah, Group CEO & MD, Mahindra Group, commented on the deal, saying, “It’s not just a win for trade but a blueprint for a modern, values-led partnership that puts innovation, sustainability, and inclusive growth at the heart of global collaboration.”
Shah expressed Mahindra’s full backing. “At Mahindra, we believe deeply in the power of such cross-border partnerships to unlock economic potential, create high-quality jobs, and accelerate progress in future-facing sectors from green mobility and clean energy to digital technologies and advanced manufacturing.”
In the presence of Prime Ministers Keir Starmer and Narendra Modi, the much-anticipated historic India-UK Free Trade Agreement was signed on Thursday, expanding access to goods and services between the two nations.
Industry-wide optimism was echoed by Shailesh Chandra, Managing Director of Tata Motors Passenger Vehicles and President of the Society of Indian Automobile Manufacturers (SIAM), who stated that “SIAM remains committed to working closely with the Government of India to ensure the benefits of the agreement translate into greater growth, global competitiveness, and technological progress for the Indian automotive industry.”
In addition, he emphasized the deal’s wider significance by saying, “We view this agreement as part of a wider strategic engagement and believe it opens new avenues for collaboration and opportunity with a key global partner.”For passenger cars from the UK, India has opened a Tariff Rate Quota (TRQ) under the FTA. For large-engine diesel vehicles more than 2500 cc and gasoline vehicles larger than 3000 cc,
Within a quota that starts at 10,000 units and increases to 19,000 units over five years, India has pledged to gradually reduce the current 100% customs duty to 10% over a period of 15 years.
An initial 50% in-quota duty is applied to mid-sized cars (1500-2500 cc diesel up to 3000 cc gasoline), which decreases to 10% by year five.
With an increasing quota, small cars under 1500cc follow a similar tariff reduction path. While out-of-quota imports continue to be subject to tariffs ranging from 95 percent to 50 percent, depending on the size and year of the vehicle, these in-quota vehicles enjoy significantly lower duties.
Given that India has always employed high tariffs to safeguard its domestic auto sector, the TRQ represents a significant policy shift.
Up to 37,000 ICE cars made in the UK might be imported into India each year by year five at a tariff rate of just 10%, which is significantly less than the present base rate of 11%.
This gives luxury British brands like Jaguar and Land Rover, which are both owned by Tata Motors, as well as other exports from the UK, a privileged entrance route.
This is the first car tariff reduction offered by any free trade agreement to India.