India will drastically reduce its tariff on “high-end cars” imported from the UK, as part of a landmark trade deal between the two nations.
Subject to an unspecified sales quota, Indian authorities will reduce the existing tariff of more than 100% on UK-built luxury cars to 10%.
The UK government will likewise import a limit on imports of Indian-built cars in the UK, such as the forthcoming Suzuki eVitara and Toyota Urban Cruiser siblings.
The key winner in the deal is expected to be JLR, owned by India’s Tata Group, as one of the best-selling luxury brands in India.
It currently assembles the Range Rover Evoque, Range Rover Velar and Land Rover Discovery Sport in Pune and last year said it would add the highly profitable Range Rover and Range Rover Sport – both currently built in Solihull – to that group. The new trade deal will likely give JLR additional capacity to increase the supply of those models should it be outstripped by demand.
Other beneficiaries will surely include Aston Martin, Bentley and Rolls-Royce.
The UK and Indian governments have yet to confirm what constitutes a “high-end car”, however.
Indian media reports leading up to the trade deal suggested the benchmark would be set at ₹4 million, equivalent to around £35,000.
The UK government added that it has secured “India’s best ever agreement on rules of origin”, suggesting that the cars exported to India may not require local content in order to comply with the new tariff rules.
Further clarification is expected in the coming days.
Hinting at the uncertainty, Mike Hawes, chief executive of the UK's Society of Motor Manufacturers and Traders (SMMT), said: "While the agreement will likely feature compromises and might not offer unfettered market access to all UK automotive goods, we appreciate the considerable effort British negotiators have devoted to secure the first partial liberalisation of the Indian automotive market.
"We trust the deal will be fair and deliver on essential UK industry priorities, with major tariff reductions on most UK automotive exports, favourable origin requirements and a workable agreement on future bilateral trade of electrified vehicles."
The acceleration of the trade deal between the UK and India, three years in the making, is widely reported to have been a response to the punitive import tariffs recently imposed by the US.
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