India agrees to reduce tariffs on UK-built electric cars
In a press release summarising the terms of the FTA, the British government revealed that while India currently levies tariffs of over 100% on UK-origin cars, it will slash that figure all the way down to 10% on a certain quota of high-end models. India will apply the reduced rate to ICE cars initially, but it will extend that to electric cars and hybrid cars later. In return, the UK will give India access to the UK market for a certain quota of EVs and hybrid vehicles.
Citing Rt Hon Jonathan Reynolds MP, the UK’s Business and Trade Secretary, a report from Politico said India will allow importing 22,000 electric cars from the UK at a 10% tariff rate. While India will import luxury EVs from the UK at the concessional tariff rate, it will export low- and mid-range EVs to the UK, targeting the country’s mass-market car segments.
JLR, which currently has a minuscule presence in India compared to other luxury brands like Mercedes-Benz and BMW, will likely be the British automaker that benefits the most from the FTA. The company sources the Discovery Sport, Range Rover Evoque, Range Rover Velar, Range Rover Sport, and Range Rover from the Land Rover portfolio and the Jaguar F-Pace from the UK, although it imports them in knocked-down kits and conducts the final assembly locally. It is working on a wide range of EVs, including the Range Rover Sport Electric and Range Rover Electric, and could leverage the FTA when it launches those models in India.
Aston Martin, Bentley, Lotus Cars, and Rolls-Royce also stand to benefit from the FTA. The UK’s Society of Motor Manufacturers & Traders (SMMT) welcomed the FTA announcement with India. “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,” SMMT Chief Executive Mike Hawes said.
In India, Maruti Suzuki and Mahindra could be among the first automakers to take advantage of this deal. The former has confirmed that it will start exporting the Suzuki e Vitara from a factory in Hansalpur (Gujarat) to the UK later this year. Mahindra is contemplating a UK entry with its new ‘Born Electric’ series, under which it sells the BE 6 and XEV 9e SUV coupes and has indicated plans to launch three more EVs.
The FTA covers not only cars but also auto parts, although neither India nor the UK has released any details in this area so far. They may release all the details when they finalise the legal text and sign a legally binding treaty for the FTA in the coming months.
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