India-UK FTA signed: British luxury cars to get 50% cheaper, Indian EVs gain UK access

India and the United Kingdom have formally signed the long-awaited Free Trade Agreement (FTA), marking a significant step forward in bilateral economic ties. According to officials in the Commerce Ministry, India has offered a carefully crafted market access package to the UK under the automobile segment of the Comprehensive Economic and Trade Agreement (CETA). The proposal follows a phased, quota-based liberalisation strategy focused on the development and protection of domestic interests.

Concessions applied

The concessions apply exclusively to Completely Built Units (CBUs) of passenger vehicles, including Internal Combustion Engine (ICE) models and electric, hybrid, and hydrogen-powered vehicles. However, the structure of the offer ensures that India's core strengths—mid and small engine ICE vehicles and mass-market EVs—remain protected. However, the benefit will primarily apply to large-engine ICE models and high-end electric vehicles from the UK. India has safeguarded its domestic manufacturing base by excluding mid- and small-engine ICE vehicles and budget EVs from duty concessions.

For large-engine CBUs (above 3000 cc petrol and 2500 cc diesel), in-quota duties will be gradually reduced to 10% over five years. Out-of-quota units will see a 50% duty reduction phased in over 10 years. No duty relief will be extended to electric or hydrogen-powered vehicles during the initial five-year period.

From year six, any increase in EV imports under concessional rates will result in a proportional reduction in ICE vehicle quotas to maintain a cap of 37,000 units by year 15. Also, no market access will be granted to vehicles priced below £40,000 (CIF), thereby shielding India’s ambitions in the mass-market EV segment. Only luxury EVs priced above £80,000 will qualify.

Cheaper British cars

One of the most notable outcomes is the sharp reduction in import duties on British automobiles, which is expected to make luxury vehicles from the UK nearly 50% cheaper in the Indian market.

Currently, British marques like Rolls-Royce, Bentley, McLaren, Jaguar, and Land Rover operate in India. With the new duty cuts, a car like the McLaren 750S—currently priced around ₹6 crore—could see its ex-showroom price drop to about ₹3 crore. Rolls-Royce’s Phantom, priced at ₹9.5 crore, could also be halved in cost under the FTA.

Motorcycle brand Triumph, which retails its full lineup in India, will also benefit from lower duties, bringing joy to enthusiasts.

Meanwhile, Indian automakers are poised to benefit from increased access to the UK market. Mahindra, Tata Motors, and Maruti Suzuki are already eyeing or expanding footprints in Europe. Mahindra’s BE and XUV EV range and Tata’s upcoming Harrier EV are expected to become more competitive with European offerings thanks to lower tariffs.

Mahindra Group CEO Dr Anish Shah called the agreement a “transformative moment” and said it aligns with India’s strategy to build resilient supply chains and drive a global low-carbon transition.