The India-UK Comprehensive Economic and Trade Agreement (CETA) was signed on 24 July 2025 and is set to come into force on 15 July 2026. This landmark pact aims to nearly double bilateral trade to $100 billion by 2030.
Unlike the earlier trade regime, which imposed steep 100-110% duties on UK luxury cars entering India and created significant barriers for Indian EV exports to the UK, the new agreement introduces a more balanced framework. It offers phased duty reductions for UK vehicles in India while gradually opening the UK market for Indian-made electric, hybrid, and hydrogen-powered vehicles through a quota system. This marks a notable shift from the previous protectionist structure to a mutually beneficial trade arrangement.
Immediate Impact on UK Car Imports into India
Indian buyers, especially those in the premium segment, are welcoming the deal. Currently, Completely Built Units (CBUs) from the UK face very high import duties, often in the range of 100-110% for luxury and high-end vehicles. Under the FTA, duties on eligible UK made passenger cars will be reduced progressively on a quota basis. Over time, effective duties for many luxury models are expected to come down significantly, potentially to as low as 10% in later phases. This reduction is likely to make British brands such as Jaguar Land Rover, Bentley, Rolls-Royce, Aston Martin, and McLaren noticeably more affordable in India.
What the FTA Means for Indian Manufacturers
For Indian automakers, the real opportunity lies in easier access to the UK market, though the benefits are phased and quota-based.
From the 6th year of the agreement (around 2031-32), Indian made electric, hybrid, and hydrogen-powered passenger vehicles will get duty-free access to the UK under a growing quota system. The quota starts modestly at around 17,600 units in the 6th year and is expected to gradually increase to 88,000 units annually by the 15th year, mainly for vehicles priced between £20,000 and £80,000.
This development is particularly promising for leading Indian automakers:
- Tata Motors is strongly positioned with one of the broadest electric vehicle portfolios in the country and proven export experience to European markets. The company is well-placed to capitalise on the new quota system for right-hand-drive EVs.
- Mahindra & Mahindra brings strong credentials with its growing electric SUV lineup, led by models such as the BE 6, XEV 9e, and XEV 9S. Its expertise in building rugged and capable SUVs positions it favourably for the UK and European markets, where buyers appreciate both performance and versatility.
- Maruti Suzuki has already made significant progress by exporting the e-Vitara to the UK and other European countries. In a short span of just nine months since its launch, Maruti Suzuki has exported around 36,000 units of the e-Vitara, with the UK emerging as one of its largest and most important markets. The FTA is expected to further strengthen Maruti’s EV export momentum as the company scales up production.
Balanced Perspective
While the agreement has been welcomed by Indian industry, its benefits for EV manufacturers are expected to materialise gradually rather than immediately. The initial phase of the pact primarily benefits UK vehicle exports to India, whereas meaningful tariff advantages for Indian EVs in the UK market begin only from the 6th year.
Domestic companies have noted positively that the mass-market EV segment in India continues to enjoy protection during the early years of implementation. To make the most of the eventual quota-based access, Indian manufacturers will need to focus on enhancing production capacity, meeting rigorous UK regulatory standards, and developing strong right-hand-drive variants tailored to British consumer preferences.
What This Means for Indian Buyers and the Industry
For Indian consumers, the most visible short-term impact will be more competitive pricing on premium British cars. For the industry, the FTA strengthens the “Make in India for the World” narrative by providing a reliable export market for EVs. Increased exports can help manufacturers achieve better economies of scale, invest more in R&D, and reduce reliance on the domestic market.
In conclusion, the India-UK FTA marks a significant shift from the earlier high-duty regime, where UK-made luxury cars faced import duties of 100-110%, making them extremely expensive in India. Under the new agreement, these duties will be reduced progressively on a quota basis, potentially bringing them down to as low as 10% over the coming years. While Indian buyers will benefit from more affordable British luxury cars in the short term, the real long-term value lies in the structured export opportunities it creates for Indian EV manufacturers. The phased and quota-based nature of the deal ensures a balanced approach, giving both sides time to adjust. For companies like Tata Motors, Mahindra, and Maruti Suzuki, this agreement could serve as a crucial stepping stone toward stronger global EV exports, provided they continue to scale production and meet international quality standards.
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