The India-UK Free Trade Agreement officially comes into force on July 15, 2026, and it brings one of the biggest changes to hit the Indian luxury car market in years. Import duties on British-made vehicles are set to fall sharply, and some carmakers have already started slashing prices.
How the tariff cuts work
Under the new quota-based system, import duties on eligible British cars will gradually drop to just 10 percent over five years, down from as high as 110 percent today.
In year one, petrol cars above 3,000cc and diesel cars above 2,500cc will see duties fall from 110 percent to 30 percent, under a quota of 10,000 vehicles. Petrol cars between 1,500cc and 3,000cc and diesel cars up to 2,500cc will see duties drop from 66 percent to 50 percent, with a 5,000-unit quota. Cars under 1,500cc will also attract a 50 percent duty under a separate 5,000-unit quota.
Five-year plan
By the fifth year of the India-UK FTA, tariffs across all ICE vehicle categories are scheduled to fall to just 10 percent. Annual quotas will also expand, allowing up to 37,000 British-made vehicles to be imported into India each year under the concessional tariff structure. Vehicles imported beyond these quotas will continue to attract higher duties, although those tariffs are also expected to decline gradually over time.
It should also be noted that there will be no tariff concessions for electric, hybrid and hydrogen-powered vehicles in the first five years of the India-UK FTA’s implementation. From the sixth year onwards, alternative-fuel vehicles priced above GBP 40,000 (Rs 49.94 lakh) will become eligible for phased tariff reductions within specified quotas.
Carmakers started slashing prices
Jaguar Land Rover was the first to announce price reductions for models imported as CBUs (completely built units), namely the Range Rover SV and Range Rover Sport SV, ahead of the India-UK FTA coming into effect. The price of the Range Rover SV was slashed to Rs 3.50 crore from Rs 4.25 crore – a Rs 75 lakh cut – while that of the Range Rover Sport SV was cut from Rs 2.75 crore to Rs 2.35 crore, a drop of Rs 40 lakh.
While the Defender and Discovery are also imported, they will continue to attract the full extent of taxation as they are manufactured outside the UK at JLR’s Nitra plant in Slovakia. The incoming India-EU FTA could lower their prices, though.
McLaren is also set to implement substantial price cuts across its India line-up. In that, the 750S Spider is expected to see the biggest price reduction of Rs 3.32 crore (from Rs 8.78 crore to Rs 5.46 crore), followed by Rs 3 crore for the 750S Coupe (from Rs 7.94 crore to Rs 4.94 crore) and Rs 2.32 crore for the GT (from Rs 6.15 crore to Rs 3.83 crore).
Other British luxury carmakers such as Bentley, Rolls-Royce and Aston Martin will also benefit from the India-UK FTA, though they have yet to announce price reductions.
