UK-India trade deal slashes car tariffs

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The new UK-India trade deal is expected to significantly reduce tariffs on vehicle exports to India and create new investment opportunities across the automotive supply chain.

The multi-industry agreement, described by the UK government as the “most economically significant” post-Brexit trade deal, lowers import tariffs on high-value British vehicles entering India from over 100% to 10%, under a quota system. In return, the UK has agreed to reduce duties on a range of Indian goods, including auto components.

The cut in Indian tariffs is expected to increase demand for luxury vehicles manufactured in the UK, such as models from Aston Martin, Bentley, Rolls-Royce, and Jaguar Land Rover (JLR). Tata Motors, which owns JLR, is expected to be among the primary beneficiaries, with analysts predicting a boost in Indian sales volumes for UK-built models.

Indian automotive firms, including Bharat Forge, TVS Motor Company and Ashok Leyland, are expected to gain access to UK markets with lower-cost auto components and parts. This may stimulate bilateral trade in aftermarket services and parts financing arrangements.

Mike Hawes, Chief Executive of the Society of Motor Manufacturers and Traders (SMMT), welcomed the deal, noting that it “represents a historic first step in strengthening our already close automotive trade and investment ties.” He added that while the deal may not offer complete access for all automotive exports, it delivers key priorities such as “major tariff reductions on most UK automotive exports” and “a workable agreement on future bilateral trade of electrified vehicles.”

The deal follows more than three years of negotiations and signals a shift in UK trade strategy towards strengthening relationships with fast-growing economies outside Europe, trade observers in the press noted.

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