India-UK FTA To Come Into Effect On July 15; Auto Import Duties To Fall To 10% Under Quota System

It was in the July 2025 when the India-UK Free Trade Agreement (FTA) was signed and now, we finally have a date for its roll out. The FTA will officially come into force on July 15, ending months of uncertainty around its implementation and setting the stage for lower import duties on British-built vehicles entering India.

Also Read: India-EU Trade Deal: List Of Cars Likely To Get More Affordable In India

The development is particularly significant for the automotive industry, as it confirms the timeline for a gradual reduction in tariffs on UK-manufactured cars. Several luxury carmakers, including Jaguar Land Rover and McLaren, have already announced adjusted plans in India in anticipation of the agreement.

Announcing the implementation date, the UK government said businesses now have 28 days to prepare before the deal takes effect. UK Business and Trade Secretary Peter Kyle described the agreement as one that would allow businesses and consumers to begin seeing benefits immediately.

"We are bringing our landmark trade deal with India into force as quickly as we can, because we want businesses and the public to feel the benefits immediately," Kyle said.

For carmakers, the biggest change lies in the tariff structure. Under the agreement, import duties on eligible UK-built internal-combustion vehicles will be reduced through a quota-based mechanism over the next five years.

Also Read: UK-India FTA Impact: CBU Range Rover Prices Slashed By Up To Rs. 75 Lakh

The first phase will see duties on larger petrol and diesel vehicles fall substantially. Petrol cars with engines above 3.0 litres and diesel vehicles above 2.5 litres will attract a 30 per cent duty in the first year, down from the current effective rate of 110 per cent, subject to an annual quota of 10,000 units. The rate will continue to reduce over time before reaching 10 per cent by the fifth year.

Smaller-engined passenger vehicles will also benefit, though at a more gradual pace. The agreement provides for lower duties within specified quotas, creating a pathway for British manufacturers to become more competitive in a market where import taxes have historically been among the highest in the world.

The prospect of lower tariffs has already begun to influence prices. Jaguar Land Rover became the first manufacturer to publicly pass on some of the expected benefits, reducing prices of the UK-built Range Rover SV and Range Rover Sport SV by up to Rs 75 lakh earlier this year.

Also Read: McLaren Prices In India To Drop By Over Rs 3 Crore With India-UK FTA

McLaren Automotive is also preparing to revise prices in India. The British supercar manufacturer is set to roll out a significant downward revision for its model prices in India, with select models slated to become cheaper by as much as Rs 3.32 crore.

Other British luxury marques, including Bentley, Rolls-Royce and Aston Martin, are also expected to benefit from the agreement, though none have announced pricing changes yet.

While the FTA opens the door for cheaper imports, the benefits will initially be restricted to pure internal-combustion vehicles. Battery-electric and hybrid passenger vehicles remain outside the concession framework for the first six years of the agreement. Duty reductions for alternative-fuel vehicles will only begin later and will be subject to separate conditions and quotas.