New Delhi. The Comprehensive Economic Trade Agreement (CETA) between India and Britain has dealt a blow to the luxury car industry. Due to this deal, which was approved by the Cabinet on Monday, the sale of expensive cars in India is in trouble. Wealthy customers have stopped booking premium cars made in the UK like Land Rover, Jaguar (both owned by Tata Motors), Rolls Royce, Bentley, Aston Martin in the hope of reduction in import duty. 

Rumors of duty reduction, bookings on hold
The India-UK FTA was announced in May, which proposes to reduce the current 75-125% import duty on completely built cars (CBU) to 10%. This news put luxury car buyers on alert. Many ultra-rich customers not only postponed bookings to take advantage of the reduced duty, but some even cancelled orders.

A dealer of a leading brand said, “Customers are postponing bookings even after placing orders with the brands. This is tarnishing the image of the Indian market. Many luxury brands make cars in limited numbers to maintain their exclusivity. Now they are diverting production to other markets.”

Dealers’ concerns, customers’ logic

Dealers are handling the situation by giving clarifications to customers. Another dealer said, “We are explaining to customers that buying now will not be harmful. Firstly, it will take about a year for the deal to be implemented. Second, the duty will not decrease to 10% immediately. It will decrease gradually over several years and annual quota may also be implemented.”

The risk of waiting?
Dealers are also explaining to customers that waiting can be costly. “The prices of luxury cars increase by about 5% every year. The weakening of the rupee against the pound has also affected the prices. Waiting for years for the duty to be reduced will not only delay getting the car, but also increase the risk of buying it at an increased price.” At present, the roadmap for duty reduction will be clear after the deal is signed. Until then, both dealers and customers are in the shadow of uncertainty.