The long-awaited India-UK Free Trade Agreement (FTA) is set to bring a significant change to India’s automobile market.
Luxury cars made in the United Kingdom will soon become more affordable for Indian buyers.
This development comes as both nations finalize a Comprehensive Economic and Trade Agreement (CETA).
The deal includes tariff-rate quotas (TRQ) that will reduce import duties on a fixed number of British-made internal combustion engine (ICE) vehicles.
The move is being seen as a win for high-end car manufacturers such as Jaguar Land Rover, Bentley, and Rolls-Royce, while also offering Indian consumers a chance to own these cars at lower prices.
Current Import Duty and Tariff Barriers
Currently, India imposes some of the highest import duties on passenger vehicles in the world.
The tariffs range between 70–110% for cars and 40% for trucks, depending on engine size and vehicle type.
These high rates have long been a major barrier for foreign automakers trying to enter the Indian market.
Luxury vehicles often become unaffordable even for upper-middle-class buyers due to the inflated prices post-tax.
But with the FTA in place, the playing field is expected to shift dramatically.
Gradual Tariff Reductions Planned
The India-UK CETA will initially lower tariffs on ICE cars to 30–50%, starting from the first year of implementation.
However, these reduced tariffs will apply only to a quota of 20,000 cars annually.
Over time, these duties will be slashed further.
By the 15th year, the import duty will drop to 10% under the quota, which will then be revised to 15,000 units per year.
This step-by-step approach aims to balance market liberalization with domestic industry protection.
For out-of-quota imports, the duties will also be reduced.
They will stand at 60–95% in the first year, then drop to 45–50% from the tenth year onwards.
Safeguards for Indian Auto Industry
According to industry executives, the use of TRQs ensures that the Indian automobile sector is not overwhelmed by a sudden influx of foreign cars.
By capping imports, the agreement allows domestic automakers time to adapt, innovate, and compete.
It also gives policymakers flexibility to review quotas and tariffs based on market impact.
The FTA is thus being hailed as a balanced approach—promoting international trade while safeguarding local industries.
You can read more about tariff-rate quota systems from WTO’s official guide.
Big Win for British Automakers
British carmakers are expected to be among the biggest beneficiaries of this policy shift.
With brands like Jaguar Land Rover (JLR) already having a strong footprint in India, the lowered tariffs could give them a competitive edge over other European and American rivals.
“This agreement opens up new doors for us in India,” said a spokesperson from a UK-based auto brand.
“We see strong demand among Indian consumers, and this move helps us meet it more competitively.”
Many global luxury brands could now consider expanding their Indian dealership networks or launching new models specifically tailored for Indian roads and preferences.
Indian Consumers to Benefit
For Indian buyers, this could be the best time to consider owning a British luxury car.
The cost gap that once made these vehicles unattainable will shrink, making high-performance, feature-rich cars more accessible.
Luxury car sales in India have already seen a steady rise post-COVID, and this FTA is likely to fuel further demand.
Analysts predict that a 10–15% price drop in premium segments will significantly alter consumer behavior in metro cities and emerging markets.
A Model for Future Trade Agreements
The India-UK FTA on luxury car imports might set a template for future trade agreements with other countries.
By using a phased and quota-bound strategy, India can open its markets without sudden disruptions.
This model may also be replicated in other high-tariff sectors like electronics and spirits, enabling a broader transformation of India’s global trade posture.
For updates on India’s automotive trade policy, visit India’s Ministry of Commerce & Industry.
Opportunity With Caution
The India-UK FTA luxury car imports policy marks a major shift in trade, consumer pricing, and industrial strategy.
It promises cheaper access to British cars, greater variety for consumers, and a controlled exposure for local carmakers.
While some concerns about domestic competition remain, the move could accelerate technological innovation and encourage global partnerships in the Indian automobile landscape.
As the policy unfolds, stakeholders—manufacturers, regulators, and consumers—will need to watch market trends carefully and act swiftly to seize the opportunities that follow.