What Cars Benefit from the Free Trade Agreement (FTA) Between India and the UK

The recently finalized India-UK Free Trade Agreement (FTA) marks a significant milestone in the bilateral economic relationship between the two nations. Among its various provisions, the agreement brings notable changes to the automotive sector, particularly concerning British-made vehicles imported into India. AND NO, THE DEFENDER WON'T BE AFFECTED BY IT.

British Luxury and Performance Cars

The FTA introduces substantial tariff reductions on British luxury and performance vehicles, making them more accessible to Indian consumers. Notable models benefiting from these changes include:

• Jaguar Land Rover (JLR): As a subsidiary of Tata Motors, JLR stands to gain considerably from the FTA. Models such as the Range Rover, Range Rover Sport, and Jaguar I-PACE are expected to see reduced import duties, enhancing their competitiveness in the Indian market.
• Bentley: Luxury models like the Continental GT and Flying Spur will become more price-competitive due to lowered tariffs.
• Rolls-Royce: Iconic models such as the Ghost, Phantom, and Cullinan are anticipated to benefit from reduced import duties, potentially expanding their customer base in India.
• Aston Martin: Sports cars like the DB11 and Vantage are expected to see price reductions, making them more appealing to Indian buyers.
• Mini Cooper: The Mini Cooper SE, an electric vehicle, is likely to become more affordable, aligning with India's push towards electric mobility.
• Lotus: With plans to enter the Indian market, Lotus's electric SUV offerings could benefit from the FTA's provisions.

British Motorcycles: Potential Beneficiaries

While the FTA primarily focuses on automobiles, certain British motorcycle brands may also experience advantages:

• Triumph Motorcycles: With models like the Bonneville and Street Triple, Triumph could benefit from reduced tariffs, enhancing its competitiveness in the Indian market.
• Norton Motorcycles: Known for its classic designs, Norton may find it more feasible to re-enter or expand in India under the new trade terms.
• Royal Enfield (UK operations): Although primarily an Indian brand, any UK-manufactured components or models could see cost benefits.

However, it's essential to note that the extent of these benefits will depend on the specific terms outlined in the FTA regarding motorcycles, which have not been explicitly detailed in the available information.

Vehicles Unlikely to Benefit from the FTA

Despite the broad scope of the FTA, not all vehicles will enjoy reduced tariffs:

• Electric Vehicles (EVs): The current agreement excludes EVs from tariff reductions. India's focus remains on promoting domestic EV manufacturing, and thus, imported EVs, even from the UK, will continue to face high import duties.
• High-Volume Imports: The FTA includes a quota system, allowing a limited number of vehicles to be imported at reduced tariffs. Once this quota is exceeded, standard import duties apply, limiting the benefit for mass-market models.

Electric Vehicles (EVs)

The FTA also addresses the import of high-end electric vehicles from the UK. India is considering a concessional tariff of 30% on up to 2,500 electric vehicles annually imported from the UK, each priced above $80,000. This move aims to make luxury EVs more accessible while balancing the growth of domestic EV manufacturing.

UK-Based Manufacturing by Global Brands

Several global automotive brands with manufacturing facilities in the UK are also set to benefit:

• Nissan: Models like the Qashqai and Leaf, produced in the UK, may see reduced tariffs, enhancing their appeal in India.
• Toyota: UK-manufactured models such as the Corolla and Auris could become more competitively priced.
• Honda: Vehicles like the Civic and CR-V, produced in the UK, are anticipated to benefit from the FTA's tariff reductions.
• BMW (Mini): The Mini Cooper series, manufactured in the UK, is expected to see price reductions, particularly the electric variants.
• Bentley: Bentley's luxury models, produced in the UK, will likely become more affordable for Indian consumers.

Tariff Rate Quotas (TRQs)

To protect domestic industries while promoting trade, the FTA includes Tariff Rate Quotas. Under this system, a specified number of vehicles can be imported at reduced tariffs, beyond which standard duties apply. For instance, the Society of Indian Automobile Manufacturers (SIAM) has proposed zero duties on up to 26,400 vehicles in the first year, increasing to 46,200 over a decade. This approach balances market access with domestic industry interests.

Domestic Industry Safeguards

While the FTA opens avenues for British automotive imports, it also incorporates measures to safeguard India's domestic automotive sector. High-profile models like the Range Rover may not immediately see tariff cuts, ensuring that local manufacturers remain competitive.

In Summary:

The India-UK FTA is set to reshape the automotive landscape in India, making British luxury and performance vehicles more accessible. While consumers can look forward to a broader range of premium vehicles at competitive prices, the agreement also ensures that domestic manufacturers are protected through strategic safeguards and phased implementations.