Great news for luxury car buyers as Rolls-Royce and Range Rover vehicles are set to become more affordable thanks to the India-UK Free Trade Agreement (FTA).

This deal, a significant boost for both nations amidst high U.S. tariffs, reduces duties substantially. While some argue U.S. President Donald Trump is weaponising trade and holding global markets hostage, this FTA offers a reason to celebrate. It also opens doors for Indian automakers to target the mainland European market as their next frontier.

An official statement released by the Indian Government said, "India will gain from tariff elimination on about 99% of the tariff lines, covering almost 100% of the trade value, offering huge opportunities for an increase in bilateral trade between India and the UK."

India-UK FTA: What to expect?

The tariff reduction between India and the UK ensures that made-in-UK vehicles like Aston Martins, Bentleys, and Range Rovers will no longer face import duties exceeding 100%. According to the United Kingdom's Department for Business & Trade, UK-made automobiles will receive a major import tariff slash from over 100% to 10%. The complete details are yet to be announced. This is a shot in the arm for car manufacturers like Mini, Aston Martin, Rolls-Royce, Range Rover, Bentley, which are directly imported from the UK. With a slash of around 90% of import duties, the prices of such luxury vehicles will be quite significant.

The United Kingdom's Department for Business & Trade stated this deal gives UK businesses a first-mover advantage with a new economic superpower. Currently the biggest country in the world by population, India is projected to move from its fifth-largest global economy to third in the next three years, thanks to the highest growth rate in the G20. This gives opportunities for high-growth sectors by slashing tariffs for the UK's manufacturing sectors, including for automotives, electrical machinery and high-end optical products.

India-UK FTA: What about Indian players?Image: Norton

Two-wheelers will benefit from the FTA, like TVS Motor, which owns the UK-based Norton Motorcycles. TVS had earlier announced that the nameplate Norton will make its debut in India this year, and now with the FTA, this will help in quickening the pace. Congratulating the Indian Government for securing the historic FTA, Sudarshan Venu, MD, TVS Motor Company, said, "We applaud our PM's vision to enhance India's trade links globally. It creates large opportunities for Indian companies like ours to expand further and access new markets. We really appreciate the effort taken by the Government to make this historic India-UK Free Trade Agreement. Our British brand Norton will launch later this year, and this agreement will help us scale faster and leverage common supply chains. We are excited as we further progress towards Viksit Bharat."

The FTA gives a golden opportunity for Indian automobile manufacturers like Mahindra & Mahindra, who are looking to enter the international market with their two-born electric SUVs, the BE 6 and the XEV 9e. With reduced tariffs, Mahindra will be able to enter the UK market at a competitive price. At the Q4 earnings call, Mahindra's Executive Director and CEO of the Auto and Farm Sectors, Rajesh Jejurikar, said that the company has plans to enter the EU electric vehicle market and will roll out left-hand drive EVs.

The FTA gives an opportunity to auto component makers as they will also enjoy the cut in tariffs.

Commenting on this, Saurabh Agarwal, Partner & Automotive Tax Leader, EY India, said, "This deal should really help our auto component makers sell more in the United Kingdom. At the same time, Indian consumers might be able to buy premium cars at the right price point as soon as they are launched globally. It probably won't shake up our Indian car manufacturers too much because most Indian consumers still prefer the more affordable options. What this agreement really shows is that the government wants to create a level playing field, which is good news for all Indian consumers in the long run. This could also set a precedent for more such deals down the line."