Luxury car buyers in India have a reason to celebrate. With the India–UK Comprehensive Economic and Trade Agreement (CETA) coming into force on July 15, import duties on eligible British-made luxury cars have been sharply reduced, bringing down prices of premium models by as much as ₹3 crore. The development also signals India's growing push to conclude another major trade agreement with the European Union, which could eventually make several European luxury brands more affordable.
The agreement cuts customs duty on eligible completely built-up (CBU) British petrol and diesel vehicles from 110 percent to 30 percent under a tariff rate quota (TRQ).
The immediate beneficiaries include iconic British brands such as:
Rolls-Royce
Range Rover
Aston Martin
McLaren
Industry estimates suggest prices of several imported models could decline by 20–25 percent, translating into savings ranging from about ₹1 crore to ₹3 crore depending on the model.
The lower duty does not apply to all imports.
Key features of the scheme include:
A quota of 10,000 fully built petrol and diesel vehicles in the first year.
Imports within this quota will enjoy the reduced 30 percent customs duty.
Once the annual quota is exhausted, the normal import duty will apply.
Over the next 15 years:
The quota will be expanded gradually.
The concessional duty will decline further from 30 percent to 10 percent.
This is expected to make British luxury vehicles progressively more competitive in the Indian market.
British-built electric vehicles will not receive the concessional duty immediately.
According to the Directorate General of Foreign Trade (DGFT) notification, EVs manufactured in the UK will become eligible only from the fifth year of the agreement, giving India's domestic EV industry additional time to strengthen its competitiveness.
Jaguar Land Rover (JLR) has already announced price reductions on imported models, including:
Range Rover Sport SV
Range Rover SV
Industry executives expect India's imported luxury vehicle market to expand significantly over the next few years. JLR's share of imported vehicles in its India sales is projected to rise from around 3–4 percent currently to 7–10 percent.
The India-UK CETA is among India's most significant recent free trade agreements.
Its key benefits include:
Nearly 99 percent of Indian exports to the UK receiving duty-free access.
Lower tariffs on selected UK exports to India.
Greater market access for services and investment.
Bilateral trade between India and the UK reached $25.12 billion (around ₹2.16 lakh crore) in FY26, up 8.62 percent from $23.13 billion (around ₹1.99 lakh crore) in the previous year.
Attention is now shifting to the proposed India-European Union Free Trade Agreement, which both sides are aiming to conclude soon after years of negotiations.
If finalised, the agreement could have a much broader impact than the UK deal because the EU is India's second-largest trading partner and home to several global automobile manufacturers.
A successful India-EU FTA could eventually pave the way for lower import duties on premium European brands such as BMW, Mercedes-Benz, Audi, Porsche, Ferrari, Lamborghini and Volvo, subject to the final terms of the agreement.
Negotiations remain complex, particularly over automobiles, agriculture, government procurement and sustainability standards. However, both India and the EU have set an ambitious target of concluding negotiations by the end of 2026.
For Indian consumers, an eventual EU agreement could significantly expand the range of premium vehicles available at more competitive prices, while giving Indian exporters improved access to one of the world's largest consumer markets.
