India–UK FTA Drives Auto Industry Boom: A Turning Point for Indian Mobility

GG News Bureau
New Delhi, 25th July: The Indian automobile sector has hailed the recently signed India–UK Free Trade Agreement (FTA) as a transformative step, with potential to redefine trade flows, competitiveness, and innovation across both nations. The agreement, finalized in the presence of Prime Ministers Narendra Modi and Keir Starmer, offers sweeping tariff reductions, improved market access, and a framework for long-term strategic collaboration.

Industry Reactions: Optimism with a Vision

Anish Shah, Group CEO & MD of Mahindra Group, called the FTA “a blueprint for a modern, values-led partnership,” emphasizing its role in driving sustainable growth, innovation, and high-quality employment across sectors such as green mobility, digital technology, and clean energy. His remarks capture the wider industry sentiment—that this is not just a trade deal but a symbol of India’s growing assertiveness on the global economic stage.

Shailesh Chandra, MD of Tata Motors Passenger Vehicles and President of SIAM (Society of Indian Automobile Manufacturers), noted that SIAM looks forward to working with the government to ensure that the agreement delivers tangible growth and global competitiveness for India’s auto sector. According to Chandra, this deal positions India as a critical node in the global automotive value chain.

What’s in the Deal for Automakers?

A centerpiece of the FTA is the Tariff Rate Quota (TRQ), which significantly lowers import duties for a range of vehicles from the UK. Key highlights include:

• For large-engine cars (over 3000 cc petrol or 2500 cc diesel), customs duties will fall from 100%+ to 10% over 15 years within a quota starting at 10,000 units and rising to 19,000.
• Mid-sized vehicles (1500–2500 cc diesel or up to 3000 cc petrol) will see a duty cut from 50% to 10% by year five.
• Small cars under 1500 cc also benefit from phased reductions, supporting more affordable imports.

These cuts provide a new gateway for premium British brands like Jaguar Land Rover (JLR)—ironically, owned by Tata Motors—as well as UK-based manufacturers eager to tap into India’s large, fast-growing market.

A Strategic Shift in India’s Trade Policy

The FTA marks a historic shift in India’s trade policy, traditionally built on high tariffs to protect domestic industries. By year five, up to 37,000 UK-built ICE vehicles could be imported annually at only 10% duty—a dramatic departure from the current base rate of 110%.

However, it’s more than just an economic agreement. The FTA is part of India’s broader pivot toward global engagement, signaling its readiness to embrace value-based globalization and technological collaboration.

Challenges and Opportunities

While the Indian auto sector is optimistic, the agreement also introduces competitive pressure on domestic players. To thrive, companies will need to innovate, scale, and globalize. In return, Indian firms gain access to the UK market under reciprocal terms—opening doors for joint ventures, R&D alliances, and green mobility innovations.

The Road Ahead

The India–UK FTA isn’t merely a tariff adjustment—it’s a catalyst for economic transformation. It aligns with India’s ambition to become a manufacturing powerhouse and mobility leader, leveraging trade as a strategic tool. If successfully implemented, this agreement could redefine India’s automotive footprint globally, empowering the nation to drive into a future built on technology, sustainability, and global partnership.