Prime Minister Narendra Modi is in London to sign the historic India-UK Free Trade Agreement, which aims to strengthen the economic ties between the two countries and boost job creation. One of the biggest gainers for this FTA will be the luxury car manufacturers like Jaguar, Land Rover, Rolls-Royce, Bentley, Aston Martin and McLaren. The stratospheric prices of these vehicles will plummet as India will slash the import tariffs from 100% to 10% under a quota system, which was earlier confirmed by the UK’s Department for Business & Trade. With India all set to scrap the import tariffs, many luxury car buyers have put a hold on bookings. Dealerships remain frustrated as there is still no clarity on how and when these new lower duties will be enforced.
Made-in-the-UK luxury cars to be more ‘affordable’
The Indian automobile market pretty much offers almost all the mainstay luxury nameplates, including the Tata Motors-owned Jaguar and Land Rover, McLaren, Bentley and the iconic Rolls-Royce. Legendary sports car maker McLaren made its debut in India in 2022 and offers its entire portfolio. Imagine buying the Rs 5.91 crore McLaren 750S for under Rs 3 crore. We aren’t directly cutting the MRP by 90% because these luxury vehicles will come with additional taxes, registration charges, insurance and GST.
Under the new FTA, many Indian car enthusiasts can now stop dreaming and start planning to buy ultra-luxury SUVs like Bentley Bentayga and Rolls-Royce Cullinan, which currently cost Rs 6 crore and Rs 12 crore, which could be available at around Rs 3 crore and Rs 6 crore, respectively.
The FTA will also introduce a quota system that will ensure that the substantial tariff cut will be limited to a number of vehicles, and this is expected to be different for internal combustion engines and electric vehicles.
Earlier on the announcement of the India-UK FTA, Saurabh Agarwal, Partner & Automotive Tax Leader, EY India, said, “This deal should really help our auto component makers sell more in the United Kingdom. At the same time, Indian consumers might be able to buy premium cars at the right price point as soon as they are launched globally. It probably won’t shake up our Indian car manufacturers too much because most Indian consumers still prefer the more affordable options.”
Music to the ears of two-wheelers
Triumph Motorcycles has been in India for a long time, and its premium range is made in the UK. By being imported as CBU (Completely Built Unit), the iconic motorcycles like the Rocket 3 Storm and the ADV, the Tiger 1200, cost Rs 22.49 lakh and Rs 19.39 lakh, respectively. There is good news for motorcycle fans, as the FTA will also cut down these lofty prices.
A boon for domestic manufacturers
The FTA will play a crucial role for Indian manufacturers in the export markets. Leading companies like Mahindra, Maruti Suzuki, Royal Enfield, TVS and Bajaj Auto will further ramp up their export plans with their made-in-India products. Mahindra had earlier confirmed to the media that they already have plans for the EU and the UK markets. On the other hand, Maruti Suzuki’s first all-electric vehicle, the e Vitara, is already sold in the UK, and now with the FTA, the company will be able to price it more competitively.
Indian two-wheeler companies like Royal Enfield, which has a huge presence in the UK market, along with TVS-owned Norton brand and made-in-India sub-400cc Triumph motorcycles, will also receive benefits from this landmark India-UK Free Trade Agreement.
