A big agreement has been reached between India and the United Kingdom (UK). This agreement is a ‘Free Trade Agreement’, that is, an agreement to trade without any restrictions. This will increase trade between the two countries and some things will become cheaper.
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Indian goods will benefit
This agreement will benefit many Indian businesses, such as those making clothes, seafood, leather and car parts. Now these goods will not be taxed in the UK or will be taxed very less, due to which they will be sold cheaper there. Indian companies like Tata and Mahindra will also be able to sell their electric vehicles in the UK.
British cars and bikes will become cheaper!
The biggest news is that India has promised to reduce tax on 90% of the things coming from the UK. Currently, cars that come from the UK are taxed up to 100-110%! But now it will gradually decrease to just 10%. This means that expensive cars like Jaguar, Range Rover, Land Rover Defender, Bentley and Rolls-Royce will become very cheap in India.
Suppose, a Land Rover Defender costs Rs 52 lakh in the USA, but by the time it comes to India, it becomes Rs 1 crore 24 lakh. Now after the reduction in tax, it can be available for Rs 60-65 lakh! However, this benefit will be available on only a few cars, because there will be a ‘quota system’ for this, that is, only a few vehicles will be able to come at a lower tax. It is not known yet how much this quota will be.
Not only cars, British bikes like Norton (which is owned by TVS) and Triumph (which is run by Bajaj Auto) will also become cheaper.
What else will become cheaper?
- Scotch whisky and gin: These are currently taxed at 150%, which will be reduced to 40% in the next 10 years. Meaning, these will also become cheaper.
- Business travel: People who travel between UK and India for business will find their work easier.
- Car parts and electronics: Car parts and things like MRI machines coming from UK will also be cheaper.
What will be the impact on car companies?
This agreement is a good opportunity for UK car companies to expand their business in India. In 2024, India bought cars worth Rs 650 crore from UK, of which the maximum vehicles were from Jaguar Land Rover (JLR). JLR, a Tata Motors company, has also started a new factory in Tamil Nadu, which will make the movement of car parts between India and UK easier.
However, some people also believe that due to the quota system, the prices of more cars may not come down that quickly. And if companies keep their prices high even after the tax is reduced, then customers will not get the full benefit.
What will happen next?
This agreement is the biggest trade deal for the UK after Brexit and is also very special for India. It may take up to a year for this agreement to be fully implemented, as approval from the UK Parliament will also have to be taken. India’s Prime Minister Modi and the UK leader have described it as a big deal for both countries.
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Last thing
This agreement between India and UK can bring a big change for the business of vehicles. Indian customers will benefit from expensive cars and bikes becoming cheaper, and Indian companies will be able to expand their business in the UK. If you are thinking of buying a vehicle like Range Rover, Defender or Jaguar, then perhaps the time after 2025 can be good for you!
Frequently Ask Question (FAQs)
- When will the India-UK FTA come into force?
- It is expected that it will come into force by 2026, when the UK Parliament will pass it.
- Which British cars will get cheaper?
- Cars like Jaguar, Range Rover, Land Rover Defender, Rolls-Royce, Bentley and Mini will become cheaper.
- Will all UK cars be taxed at 10%?
- No, this will only apply to a few cars as there will be a quota system.
- Will Indian car companies also benefit?
- Yes, companies like Tata Motors and Mahindra will be able to sell their electric vehicles in the UK.
- Will British bikes also become cheaper?
- Yes, bikes like Norton and Triumph will also become cheaper.
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