The recently finalized India-UK Free Trade Agreement (FTA) marks a significant milestone in trade diplomacy, particularly for India’s thriving automotive sector. With the removal and gradual reduction of key tariffs, the FTA is poised to unlock new export opportunities, safeguard India’s electric vehicle ecosystem, and enable Indian manufacturers to scale globally—especially in the competitive UK market.
Key Highlights of the India-UK FTA for Automotive Trade
| Focus Area | Details |
|---|---|
| Tariff Elimination | Removal of 18% duty on Indian automotive exports to the UK |
| Luxury Car Imports (UK to India) | Gradual tariff cut to 10% over 10–15 years |
| Electric & Hybrid Imports (UK) | No customs duty concession in India – protection for Indian EV industry |
| EV Sales in India (FY25) | 1.97 million EVs sold (↑17% YoY), hybrids ↑12% |
| PLI Investment in EVs | ₹25,000 crore invested by Indian firms |
| Indian MSME Impact | Improved access to UK auto parts market; enhanced export potential |
| Truck Import Tariff (UK trucks) | Gradual reduction from 37% to 8.8% over 10 years with quota system |
| Market Expansion | TVS, Hero MotoCorp to leverage duty-free access for UK market penetration |
| Duty-Free Access for Exports | 99% of Indian automotive exports to the UK covered |
| Regulatory Challenges | Carbon tax compliance, local content norms remain to be addressed |
How the FTA Boosts Indian Automotive Exports
Immediate Export Competitiveness
With the removal of the 18% tariff, Indian automotive manufacturers gain a direct cost advantage in the UK—one of the largest and most mature automobile markets. This tariff advantage could help Indian vehicles become more price competitive compared to EU and Japanese brands, particularly in the two-wheeler and compact car segments.
Support for Auto Component Exporters & MSMEs
India’s auto parts industry, a significant contributor to overall automotive exports, will benefit from streamlined market access. MSMEs—traditionally focused on domestic manufacturing—are now better positioned to diversify their export portfolios, especially in UK aftermarket and assembly-line supply chains.
Encouraging Clean Mobility Domestically
While the UK benefits from better access to India for ICE (Internal Combustion Engine) luxury vehicles, India has strategically shielded its EV space. The decision not to offer duty concessions on electric and hybrid vehicle imports from the UK ensures that Indian EV makers continue to dominate the domestic market without foreign competition undermining local growth.
Strengthening the Make-in-India Vision
This FTA complements India’s Production-Linked Incentive (PLI) scheme by providing export access that aligns with its domestic manufacturing incentives. With over ₹25,000 crore already invested under the PLI auto scheme, companies now have a lucrative export channel to recover capital and scale operations.
Long-Term Trade & Supply Chain Integration
Beyond direct sales, the agreement sets the foundation for closer supply chain collaboration, such as Indian firms participating in UK assembly networks, component engineering partnerships, and EV R&D collaboration.
Conclusion: A Strategic Win for Indian Automakers
The India-UK FTA is not just about tariff concessions—it’s a strategic export accelerator. While the UK market opens up to Indian vehicles and components, India retains control over its EV policy space, allowing local companies to grow unchallenged. The 99% duty-free access granted to Indian automotive exports could increase bilateral trade, enhance manufacturing output, and create jobs across India’s industrial belts.
For companies like TVS Motor, Hero MotoCorp, Tata Motors, and component manufacturers in Chennai, Pune, and Gurugram, this FTA is a call to expand, invest, and innovate for the global market.
Glottis Limited 
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