Luxury Car Makers Welcome India-UK FTA
Mercedes-Benz and BMW have welcomed the India-UK Free Trade Agreement (FTA), but noted that it may not have a significant impact on luxury car prices in India. The agreement, signed last week, aims to lower tariffs on 99% of Indian exports and boost two-way commerce to $120 billion by 2030 from the current $60 billion.
Santosh Iyer, MD and CEO of Mercedes-Benz India, told PTI that while the company supports free trade, the expected price correction may not be significant. “Around 95% of the cars we sell in India are completely knocked down (CKD) units, which means we are already paying a duty of just 15-16%. So, expecting a huge price correction even with an FTA is unlikely,” Iyer said.
The second critical factor is the quota-based system for imported cars, Iyer added. Vikram Pawah, President and CEO of BMW Group India, also supported the FTA, stating that it will contribute to the vision of ‘Viksit Bharat’. However, he noted that the impact on the Indian luxury segment will become clearer once more details are available.
Both companies have strong local production and localization in the Indian market. The India-UK FTA includes adequate safeguards to protect sensitive sectors, with the import duty on petrol and diesel engine vehicles from the UK to be reduced over 10-15 years within a pre-defined quota.
The agreement is expected to boost overall trade between the two countries, making it easier for British firms to export products like whisky and cars to India.
