Detail on the advantage of India-UK trade arrangement for upscale automobile purchasers in India outlined
The India-UK Free Trade Agreement (FTA) is set to significantly impact the Indian luxury car market, offering substantial reductions in import tariffs for British luxury car brands like Rolls-Royce, Bentley, Jaguar, Land Rover, Aston Martin, and McLaren.
Under the FTA, India has agreed to reduce tariffs on UK automotive imports, lowering the cost of importing UK-built luxury cars. This move will make these high-end vehicles more competitively priced and accessible in the Indian market, which is considered a significant growth opportunity for these brands.
Jaguar Land Rover (JLR), a key UK player with multiple luxury models like Range Rover and Velar, has welcomed the tariff cuts, noting that while most of their cars sold in India are currently locally assembled to benefit from lower taxes, the FTA will reduce tariffs on high-value UK exports—mostly special edition or SV (Special Vehicle) models that are fully imported.
The tariff reductions, however, are subject to quota restrictions and phased implementation, especially for internal combustion engine vehicles. Electric vehicle (EV) imports have even more limited concessions, with only high-end EVs priced above 80,000 pounds receiving significant duty reductions. For cars priced between 40,000 and 80,000 pounds, the duty will drop sharply, while electric cars priced below 40,000 pounds are excluded from any customs duty relief.
Despite the phased implementation and quota limits, the FTA offers a valuable window for market expansion for these luxury car brands. The overall FTA framework also supports stronger intellectual property protection and regulatory harmonization, which can benefit luxury car branding, after-sales service, and supply chains—factors that can indirectly boost sales.
The luxury car market in India is growing, with 51,406 units sold in FY25, marking a 3% year-on-year growth compared to 49,862 units in FY24. Jaguar Land Rover experienced a 40% year-on-year growth, selling 6,183 units in the last financial year. Mercedes-Benz led the market with 18,928 units sold in FY25, marking its best-ever fiscal performance. BMW secured the second position with 15,810 units sold, recording a 5% rise from FY24.
Arun Surendra, Chairman and Group Managing Director at VST Group, states that the luxury car segment is growing faster than the mass segment and is seeing solid traction from Tier-2 cities, especially in the SUV and EV space. The India-UK FTA, therefore, creates a favorable environment for sales growth of British luxury car brands in India by making imported luxury vehicles more accessible price-wise and improving the overall trade and regulatory climate.
- The India-UK Free Trade Agreement (FTA) will impact various sectors beyond automotive, potentially reducing tariffs on imports such as fashion-and-beauty products, food-and-drink, home-and-garden, technology, entertainment, and even luxury goods, creating a more competitive market for British brands in India.
- As the Indian luxury car market expands, high-end fashion brands might find an opportunity to tap into the growing demand from Tier-2 cities, which are witnessing solid traction in the luxury segment, particularly in the SUV and EV space, as stated by Arun Surendra, Chairman and Group Managing Director at VST Group.
- In the realm of technology, the FTA could lead to lower tariffs on British hi-tech products and services, fostering collaborations between Indian and UK tech firms, while bolstering innovation in fields like AI, automation, and cyber security.
- It is worth noting that entertainment and sports industries in India may also benefit from the FTA, as it provides a foundation for stronger intellectual property protection and regulatory harmonization, potentially encouraging greater collaboration and investment between Indian and UK entities in these fields.
