The conclusion of the bilateral India-UK free trade agreement (FTA) is poised to become a game-changer for India’s premium automobile segment. As part of the agreement, import duties on a fixed quota of fully built vehicles from the UK will drop dramatically from over 100% to just 10%, setting the stage for an aggressive expansion by British luxury car brands in India. Companies such as Tatas-owned Jaguar Land Rover (JLR), Rolls-Royce, Bentley, Aston Martin, McLaren, and Mini are set to be the major beneficiaries of this tariff relief.
With British-made cars becoming more price-competitive, Indian consumers could see premium models like the Range Rover experience price reductions of up to 40%. For instance, JLR’s flagship SUV, which currently sells for around Rs 2.4 crore due to steep import duties and GST, could see its base price fall below Rs 1.5 crore after the new tariff regime is implemented, analysts said. The savings per vehicle could be close to Rs 90 lakh on lower variants and even higher on bespoke models, thereby reshaping the value proposition in the high-end car segment. However, it’s not yet clear whether any cess would be applicable over and above the import duty.
Yet, while British manufacturers gear up for expansion, Indian automakers are watching with caution. The government has not disclosed the final vehicle quota. More critically, Indian companies fear that this precedent could cascade into future FTAs with other nations further exposing them to foreign competition in a price-sensitive domestic market.
Unlike the UK, where the existing tariff on Indian car imports is already 10%, Indian manufacturers are not looking at significant immediate gains from the deal. Despite this, companies such as Tata Motors, Maruti Suzuki, and Mahindra & Mahindra (M&M) see long-term potential in the UK and broader European market, particularly for electric vehicles (EVs), which are being entirely developed and built in India.
For instance, Tata Motors is preparing to launch its premium electric brand, Avinya, in 2026, the same year the FTA is expected to take effect. Avinya will sit above Tata’s current range but below JLR, targeting discerning global buyers with a platform co-developed with JLR. Meanwhile, Maruti Suzuki is gearing up to manufacture its electric SUV, the e-Vitara, exclusively in Gujarat for overseas markets, including the UK. Mahindra is also planning to take its newly unveiled BE 6 and XUV 9e to Europe, starting with right-hand drive variants suitable for the UK market.
Rajesh Jejurikar, executive director and CEO – automotive and farm equipment sectors, M&M said, “We do have a plan to go to the European Union with our electric vehicles, but that will be in a calibrated way. We will do right-hand drive EVs first before moving to left-hand-drive”.
Responding to a FE query, RC Bhargava, chairman, Maruti Suzuki said, “So far nobody has been exporting cars to the UK. We will be sending EVs to the EU and that will be under the present duty structure”.
Beyond complete vehicles, the deal is also expected to boost exports and R&D collaborations in the auto components sector. Industry leaders believe the FTA will not only increase trade volumes but also create synergies in innovation and supply chain integration between the two countries. TVS Motor, for example, expects its British marque, Norton, to benefit from faster scaling under the FTA. Sudarshan Venu, MD, TVS Motor Company stated, “Our British brand Norton will be launched later this year and this agreement will help us scale faster and leverage common supply chains”.
Vikram Pawah, president and CEO BMW Group said, “BMW Group supports free market access and reduction of trade barriers as it’s a win-win situation for overall economic growth and benefits the consumers. The impact on the Indian luxury segment will become clearer once we have more information regarding the finer details. At the same time, BMW Group India has very strong local production and localisation in India market and remains committed towards that”.
As the final contours of the trade deal unfold, it is clear that while British luxury brands stand to gain first, Indian players are laying the groundwork for a more assertive global presence, especially in the electric mobility space.
