New India-UK trade pact set to drive Auto sector growth through tariff reform

In a move poised to significantly transform the automotive landscape between two global economies, the India–UK Free Trade Agreement has introduced sweeping tariff reductions on a variety of vehicles, including internal combustion engine (ICE) cars, electric vehicles (EVs), hybrids, and hydrogen-powered cars. According to an analysis by Deloitte, the agreement stipulates that while tariffs will be lowered, import volumes will be regulated through a quota system to avoid sudden surges. Nevertheless, this structured approach is anticipated to enhance the accessibility of high-end UK-manufactured vehicles within the Indian market. In terms of specifics, tariffs on high-end ICE vehicles will see a substantial decline—from a steep 110 percent in the initial year to just 30 percent, further dropping to 10 percent by the fifth year, contingent on quotas. For electric, hybrid, and hydrogen-powered vehicles, tariff reductions will commence from the sixth year, starting at 110 percent and gradually reducing to 40 percent, before eventually settling at 10 percent in the tenth year, again subject to quota constraints. Industry leaders have welcomed the agreement as a pivotal milestone in economic cooperation and cross-border synergy. Mr. R. Dinesh, Chairman of TVS Supply Chain Solutions, praised the accord, stating, “I extend my heartfelt congratulations to the Hon’ble Prime Minister of India on the signing