Posted on 07 May 2025
India will cut import tariffs on British cars from 100% to 10%, as part of new trade agreements with the UK after over three years of negotiations, Kallanish reports.
The deal touted by Indian Prime Minister Narendra Modi as a “historic milestone” will open new opportunities for businesses and strengthen economic linkages in both countries, New Delhi says.
“Indian tariffs will be slashed, locking in reductions on 90% of tariff lines, with 85% of these becoming fully tariff-free within a decade,” the UK trade department notes. Automotive tariffs will be cut to 10%, with quotas set on the number of British cars that can be exported to India and vice-versa.
Further details, including volumes in the quotas and a timeline for implementation, are yet to be unveiled. The deal, which includes goods and services, is expected to increase bilateral trade by £25.5 billion ($34 billion) and UK GDP by £4.8 billion.
“Today we have agreed a landmark deal with India – one of the fastest growing economies in the world,” comments UK Prime Minister Keir Starmer. “Strengthening our alliances and reducing trade barriers with economies around the world is part of our Plan for Change to deliver a stronger and more secure economy here at home.”
Although the UK’s car exports to India only accounted for 0.1% of total exports in 2024, or 632 units, the UK-India free trade agreement is expected to strengthen automotive trade and investments.
“While the agreement will likely feature compromises, and might not offer unfettered market access to all UK automotive goods, we appreciate the considerable effort British negotiators have devoted to secure the first partial liberalisation of the Indian automotive market,” comments Mike Hawes, the ceo of UK motor trade association SMMT.
“We trust the 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,” Hawes adds.
India is said to be negotiating similar tariff cuts on foreign cars with the EU and the US.
The South Asian country could soon unlock a revolution in electric mobility, with investment from domestic and foreign players and supportive government policies. EV annual sales are predicted to reach around 10 million by 2030, making the country one of the largest EV markets in the world.
Indian conglomerate Tata Group owns British brand Jaguar Land Rover and is planning a £4 billion, 40-gigawatt-hour battery gigafactory in Somerset, UK, through its subsidiary Agratas.
Source:Kallanish
