India-UK Trade Pact: Revving Up Auto Industry Relations

India signed a trade agreement with the UK, offering duty concessions on large, high-priced vehicles while protecting the domestic auto industry. The Comprehensive Economic and Trade Agreement allows gradual tariff reductions, fostering global competitiveness. The deal may influence future trade agreements with other countries.

India has strategically granted duty concessions to UK auto exporters, focusing solely on large petrol and diesel vehicles and high-priced electric vehicles, while safeguarding its domestic automotive sector. This approach particularly shields mid and small cars, along with budget-friendly EVs, under the new trade pact, an official revealed.

The Comprehensive Economic and Trade Agreement, signed in London by Prime Minister Narendra Modi and UK Prime Minister Keir Starmer, outlines a phased reduction of import tariffs. Current rates of around 110% are set to decrease to 10% under specific quotas, primarily benefiting vehicles with larger engine capacities.

This landmark agreement is India's first auto tariff concession in any FTA and could set a precedent, potentially inspiring similar requests from other nations such as Japan and the EU. The agreement is projected to boost market access for high-end British brands, including those owned by Tata Motors, while maintaining protective measures for India's small and mid-size automotive industry segments.

(With inputs from agencies.)