The recently concluded India-UK Free Trade Agreement (FTA) is expected to impact India's automotive sector, providing new opportunities for exports, investment, and technology collaboration.

With tariff barriers set to ease and supply chain integration likely to deepen, Indian automakers are preparing to access the UK and broader European markets.

The agreement opens export opportunities for labour-intensive industries and key sectors such as engineering goods, auto parts, engines, and organic chemicals, according to a press release from the Indian government.

"India will benefit from the elimination of tariffs on approximately 99% of the tariff lines, covering nearly 100% of the trade value, which is expected to lead to an increase in bilateral trade between India and the UK," the release stated.

The UK government noted that Indian automotive tariffs will decrease from over 100% to 10% under the FTA. Quotas for automobile imports will be established on both sides, it added.

In 2024, India imported motor cars worth Rs. 6.5 billion (US$ 78.1 million) from the UK. Motorcycle imports totalled Rs. 300 million, and auto parts imports amounted to Rs. 11.5 billion, according to government data. Among passenger vehicle manufacturers, major companies exporting to India include JLR, BMW, Mercedes-Benz, Rolls-Royce, Aston Martin, and Bentley. JLR accounted for imports worth over Rs. 5 billion.

On the export front, India sent tractors worth Rs. 700 million, motorcycles worth Rs. 500 million, and auto parts worth Rs. 15.9 billion to the UK in 2024.

Major automotive companies, such as Mahindra & Mahindra, TVS Motor Company, and Tata Motors, have outlined expansion plans to access these opportunities.

Mahindra has announced plans to export its born-electric vehicles - the BE 6 and XUV 9e - to right-hand-drive markets like the UK first, followed by left-hand-drive markets. These vehicles, part of Mahindra's next-generation electric platform, are expected to benefit from reduced tariffs under the FTA with the UK.

In a recent press conference, Mahindra's Executive Director and CEO of the Auto and Farm Sectors, Rajesh Jejurikar, stated, "We do have a plan to enter the EU with our electric vehicles at some point in the future, but that will be a gradual process. We will focus on right-hand-drive EVs first and then move to left-hand-drive models. It will take time, and of course, the EU agreement will support us in manufacturing in India for global markets."

"Born-electric vehicles are developed for global markets. In the EV sector, a brand does not need 30 years of history for consumer acceptance. The acceptance of new brands will be different," Jejurikar added in a previous discussion.

Meanwhile, TVS Motor Company plans to manufacture its British motorcycle brand, Norton, in Hosur, Tamil Nadu. This move represents a shift in high-end manufacturing from the UK to India, with finished models set for global distribution. TVS Managing Director Sudarshan Venu commented on the agreement, stating:

"We support the Prime Minister's vision to enhance India's global trade links. It presents opportunities for Indian companies like ours to expand and access new markets. We recognise the government's efforts in facilitating this India-UK Free Trade Agreement. Our British brand Norton will launch later this year, and this agreement will help us scale faster and leverage common supply chains."

Additionally, Jaguar Land Rover (JLR), the British luxury car brand owned by Tata Motors, is establishing a new facility in Ranipet, Tamil Nadu. The plant will play a role in the company's long-term India-UK supply strategy and may involve the co-development of models for both domestic and international markets.

The FTA ensures comprehensive market access for goods across all sectors, covering India's export interests. India will benefit from tariff elimination on approximately 99% of tariff lines, covering nearly 100% of trade value, which is expected to contribute to increased bilateral trade with the UK, as noted by the government.

With the global automotive industry shifting towards electrification and sustainable mobility, India's manufacturing capabilities and skilled workforce position it for potential growth in the EV sector. The FTA is expected to support this growth, leading to increased job creation and global partnerships.