British luxury cars are poised to become significantly cheaper in India following the historic India-UK Free Trade Agreement (FTA). Analysts expect brands like Aston Martin, Bentley and Rolls-Royce to benefit as import duties on these vehicles are set to drop sharply from the current 100% (and above) to just 10%.
The biggest winner, however, could be Tata Motors’ British subsidiary Jaguar Land Rover (JLR). With JLR models soon attracting only a 10% duty, analysts predict a substantial reduction in retail prices across its lineup in India. Two-wheeler maker TVS Motor is also expected to benefit from the FTA.
Saket Mehra, Partner and Auto & EV Industry Leader, Grant Thornton Bharat, said that the reduction in import tariffs is expected to make luxury brands significantly more accessible in India. “This move could catalyse a surge in premium vehicle imports and intensify competition in the high-end segment. In FY2024, India imported passenger vehicles worth approximately $ 78.3 million from the UK, a figure likely to rise under the new tariff regime,” added Mehra. It is to be noted that the import of ICE vehicles from UK will be limited to a pre-defined quota.
According to brokerage firm BNP Paribas, most automotive manufacturing plants in the UK are of premium and luxury brands, such as Bentley, BMW, Rolls-Royce and Aston Martin. “While, among them, JLR could be a key beneficiary, we note that one of its key models, Defender, is not manufactured in the UK. Also, JLR already uses its India-based assembly plant for several models to enjoy the lower duty,” added BNP Paribas.
Following the FTA and progress in the demerger of its CV business, Tata Motors’ share closed 5% higher on Wednesday.
Sudarshan Venu, MD of TVS Motor Company, said that India’s trade links globally create large opportunities for Indian companies to expand further and access new markets. “Our British brand Norton will launch later this year and this agreement will help us scale faster and leverage common supply chains," stated Venu. Norton Motorcycles will make its India debut by the end of 2025.
Sunil Kalra, Partner, Governance, Risk and compliance and Forensic Investigation Services, Forvis Mazars in India, said that in the midst of ongoing geopolitical tensions and trade wars, the India-UK FTA is a welcome move. “As one of India's largest trade pacts, it allows for zero-duty access to 99% of Indian exports—infusing a big boost to industries such as textiles, auto components, marine products, and engineering goods… For Indian consumers, this agreement may translate into higher quality British goods at reduced prices, such as cars, clothing, and foodstuffs,” added Kalra.
