UK India Trade Deal: The UK-India new free trade agreement is being regarded as a win-win for the Indian auto industry. Although the duty on import of UK luxury vehicles has been lowered, domestic manufacturers have also been protected with fresh export opportunities. The balanced strategy guarantees local producers can expand while enjoying access to global trade at the same time.
Two-Way Benefit for Indian Auto Industry
India signed the agreement on 25 July, which generates a double benefit. Concessions on import duties apply only to large luxury petrol, diesel, and premium electric vehicles. Budget cars and smaller EVs are untouched. This step safeguards the domestic market, which is dependent on compact and mid-size cars. Indian auto manufacturers, in the meantime, have easier penetration into the UK market, particularly in the electric vehicle (EV) segment.
Gradual Duty Reduction
The trade agreement provides quota-based and phased reductions of duties. Luxury cars with more than 3,000cc (petrol) and 2,500cc (diesel) will be initially eligible for concessions. Import duty will be reduced gradually from about 110% to 10% over the period of five years, but only within a fixed quota. Cars over this quota will have reductions of duties phased out in 10 years, with an overall 50% reduction. This approach provides time for local automakers to get ready to face tougher competition from abroad.
Premium and Electric Vehicles
Industry observers feel that India has acquired four times the market access from the UK in exchange for these concessions. EVs, hybrids, and hydrogen cars will not receive any advantage in the first five years. From the sixth year, luxurious electric vehicles over £80,000 (approximately ₹93 lakh) will be eligible for concessions, but mass-market EVs costing below £40,000 (approximately ₹46 lakh) will continue to be excluded to shield the Indian EV market.
Protecting Indian EV Growth
To ensure balance, the agreement caps the overall import of vehicles at concessional duty at 37,000 units for 15 years. Every time luxury EVs receive entry concessions, the same amount of reduction will be seen in petrol and diesel car imports. This way, India’s expanding EV market is not harmed yet premium models remain desirable for niche consumers.
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