Automakers Support Free Trade, Say Price Cuts on Luxury Cars Unlikely Due to Local Assembly and Import Quotas
New Delhi, May 11 – Luxury carmakers Mercedes-Benz and BMW have welcomed the recently finalised India-UK Free Trade Agreement (FTA) as a positive step for international commerce, but downplayed its potential impact on luxury car prices in India.The FTA, which was sealed last week, is designed to slash tariffs on 99 percent of Indian exports and facilitate smoother entry for British goods like whisky and automobiles into the Indian market. The deal aims to double bilateral trade between India and the UK from the current USD 60 billion by 2030.
Under the pact, India has built-in safeguards for sensitive sectors, including the automobile industry. Import duties on petrol and diesel vehicles from the UK will be reduced gradually over a 10–15 year timeline, and even then, the concessions apply only to a limited number of vehicles under a quota system.
Mercedes-Benz India Managing Director and CEO Santosh Iyer said the company supports the principle of free trade and sees the FTA as a welcome move. “Fundamentally, we have always advocated free trade as a multinational company, because we feel that free trade helps in better growth,” Iyer stated.
However, he tempered expectations regarding price reductions for luxury vehicles, explaining that a significant majority of vehicles sold by the industry in India—around 95 percent—are brought in as Completely Knocked Down (CKD) units, which already attract lower import duties of about 15 to 16 percent. “So to expect a huge price correction, I don't think it would happen even with an FTA,” he added.
He also pointed out the quota-based nature of the duty concession on fully imported cars, which further limits its impact.
BMW Group India President and CEO Vikram Pawah echoed similar sentiments. While he lauded the FTA as a “landmark deal” that would boost trade in goods, services, and mobility, he noted that its precise effect on India’s luxury car market would depend on further details.
“At the same time, BMW Group India has very strong local production and localisation in the Indian market and remains committed towards that,” Pawah said.
Both automakers emphasized that while the FTA aligns with their broader support for reducing trade barriers, consumers should not expect major price drops in the luxury car segment in the near term.
