India-UK FTA Duty: What is there in the India-UK deal due to which car bookings are getting cancelled!
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India-UK FTA Duty - What is there in the India-UK deal due to which car bookings are getting cancelled!
India-UK FTA Duty: The Comprehensive Economic and Trade Agreement (CETA) between India and the United Kingdom (UK) is going to be signed on Wednesday. The agreement has already been approved by the Cabinet, but even before its implementation, its effect has started showing in the luxury car market of India. The UK is dominated by many famous luxury car brands like Jaguar, Land Rover (owned by Tata Motors), Rolls Royce, Bentley, Aston Martin, McLaren, and Lotus. The proposed reduction in import duty under this agreement has created a stir among customers and dealers.Announcement of reduction in import dutyWith the announcement of the India-UK Free Trade Agreement (FTA) in May 2025, it was made clear that the import duty on Completely Built Unit (CBU) vehicles would be reduced from the current 75-125% to 10%. After this news, the attitude of customers buying luxury cars has changed. Many customers have put their bookings on hold, and some have even cancelled bookings, as they want to wait for the reduced duty to be implemented so that they can get cars at cheaper prices.Dealers' problemsAccording to a report by Times of India, dealers say that this situation has become challenging for them. Dealers of many big brands said that they had placed orders for cars based on customer bookings, but now they are facing direct losses due to customers stopping or cancelling bookings.
Apart from this, this situation can also become a matter of concern for international luxury car brands. These brands make their vehicles in limited numbers so that their exclusivity remains. If bookings in India are low, then these companies can start sending their cars to other countries, which may reduce their availability in the Indian market.
Customers' thinkingThis decision of the customers is not completely wrong. A luxury car available for Rs 1 crore in the UK can cost up to Rs 3 crore in India due to import duty, registration tax, RTO charges, and other local taxes. Delaying the purchase in the hope of lower import duty may seem like an economically wise move for customers. However, dealers are trying to explain to customers that postponing the purchase just waiting for the duty reduction may not always be beneficial.
Duty reduction will take timeDealers say that even if this agreement is signed, it may take about a year to be implemented. Apart from this, the exemption in import duty will also not be implemented immediately, but it will be implemented gradually over several years. Also, some annual quotas will also be fixed, which will limit the number of vehicles imported.The prices of luxury cars increase by an average of 5% every year, and the price increase is also seen due to the weakness of the rupee against the pound. In such a situation, if customers wait for a long time, they will get the cars at a higher price, and delivery may also be delayed.Impact on pricesCurrently, a luxury car sold for Rs 1 crore in the UK attracts 125% import duty in India, after which its price becomes Rs 2.25 crore. If the import duty is reduced to 10%, then such a car can be available in India for Rs 1.10 crore after duty. However, this is only an estimated price, as it will also include RTO charges, registration tax, and other local taxes, which will increase the final price.
Apart from this, this situation can also become a matter of concern for international luxury car brands. These brands make their vehicles in limited numbers so that their exclusivity remains. If bookings in India are low, then these companies can start sending their cars to other countries, which may reduce their availability in the Indian market.
Customers' thinkingThis decision of the customers is not completely wrong. A luxury car available for Rs 1 crore in the UK can cost up to Rs 3 crore in India due to import duty, registration tax, RTO charges, and other local taxes. Delaying the purchase in the hope of lower import duty may seem like an economically wise move for customers. However, dealers are trying to explain to customers that postponing the purchase just waiting for the duty reduction may not always be beneficial.
Duty reduction will take timeDealers say that even if this agreement is signed, it may take about a year to be implemented. Apart from this, the exemption in import duty will also not be implemented immediately, but it will be implemented gradually over several years. Also, some annual quotas will also be fixed, which will limit the number of vehicles imported.The prices of luxury cars increase by an average of 5% every year, and the price increase is also seen due to the weakness of the rupee against the pound. In such a situation, if customers wait for a long time, they will get the cars at a higher price, and delivery may also be delayed.Impact on pricesCurrently, a luxury car sold for Rs 1 crore in the UK attracts 125% import duty in India, after which its price becomes Rs 2.25 crore. If the import duty is reduced to 10%, then such a car can be available in India for Rs 1.10 crore after duty. However, this is only an estimated price, as it will also include RTO charges, registration tax, and other local taxes, which will increase the final price.