India and the United Kingdom have concluded a long-awaited Free Trade Agreement (FTA) after more than three years of negotiations, with major implications for the electric vehicle (EV) and automotive sectors in both countries, officials announced on Monday.
Under the deal, India will reduce tariffs on UK-manufactured vehicles from the current rate of over 100% to 10% for a set quota of high-end models. While the reduced rate will initially apply to internal combustion engine (ICE) vehicles, it will later extend to hybrid and electric cars. In return, the UK will allow a limited number of Indian EVs and hybrids into its domestic market under favourable terms.
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UK Business and Trade Secretary Jonathan Reynolds said India would permit the import of up to 22,000 electric vehicles at the reduced 10% tariff rate. The agreement marks a key opportunity for British luxury carmakers like Jaguar Land Rover (JLR), Aston Martin, Bentley, Lotus, and Rolls-Royce, which have historically faced steep import duties in India.
“This deal will be fair and deliver on essential UK industry priorities, with major tariff reductions on most UK automotive exports, favourable origin requirements and a workable agreement on future bilateral trade of electrified vehicles,” said Mike Hawes, Chief Executive of the UK’s Society of Motor Manufacturers and Traders (SMMT).
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JLR, owned by India’s Tata Motors, is expected to benefit most from the revised tariff structure. The company currently assembles several models locally from imported kits and is developing a new range of electric vehicles, including the Range Rover Sport Electric and Range Rover Electric, which could qualify for lower-duty imports under the FTA.
The agreement is also a win for Indian automakers eyeing the UK market. Maruti Suzuki plans to begin exporting its Suzuki e Vitara from its Gujarat facility to the UK later this year. Mahindra is also evaluating a UK launch for its ‘Born Electric’ lineup, which includes models such as the BE 6 and XUV 9e, with three additional EVs under development.
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While the FTA also covers auto parts, further specifics are expected when the legal text is finalized and a binding treaty is signed in the coming months.