India-UK FTA to Come Into Effect from July 15, Import Duties on British Cars to Drop Sharply

The long-awaited India-UK Free Trade Agreement (FTA) is finally set to come into force on July 15, 2026, bringing major changes to the country’s luxury car market.

The biggest impact will be on British-made vehicles, with import duties set to reduce significantly under a quota-based structure. The move is expected to lower prices of several high-end models from brands such as Jaguar Land Rover, McLaren, Bentley, Rolls-Royce and Aston Martin.

Major Duty Cuts from Day One

Under the new agreement, import duties on eligible British-built internal combustion vehicles will reduce immediately.

Year 1 import duty structure:

• Petrol cars above 3.0 litres: 30% (down from 110%)
• Diesel cars above 2.5 litres: 30% (down from 110%)
• Petrol cars between 1.5 and 3.0 litres: 50% (down from 66%)
• Diesel cars up to 2.5 litres: 50% (down from 66%)
• Petrol cars up to 1.5 litres: 50% (down from 66%)

The highest benefit will be seen on large-engined luxury and performance cars, which previously attracted import duties of up to 110 percent.

Quotas to Expand Over Time

The reduced tariffs will apply under a quota system.

Annual quotas in Year 1:

• 10,000 units for petrol cars above 3.0 litres
• 10,000 units for diesel cars above 2.5 litres
• 5,000 units each for smaller petrol and diesel categories

By the fifth year of the agreement, annual quotas are expected to rise to 37,000 vehicles while tariffs across all ICE categories will gradually reduce to just 10 percent.

Luxury Brands Already Responding

Jaguar Land Rover has already begun passing on some of the expected benefits.

Recent JLR price cuts:

• Range Rover SV: ₹4.25 crore to ₹3.50 crore
• Range Rover Sport SV: ₹2.75 crore to ₹2.35 crore

McLaren is expected to take an even more aggressive approach.

Expected McLaren price revisions:

• 750S Coupe: ₹7.94 crore to ₹4.94 crore
• 750S Spider: ₹8.78 crore to ₹5.46 crore
• GTS: ₹6.15 crore to ₹3.83 crore

Bentley, Rolls-Royce and Aston Martin are also expected to benefit, although none have officially announced revised prices yet.

EVs Miss Out For Now

Interestingly, the agreement does not extend tariff benefits to electric, hybrid or hydrogen-powered vehicles during the first five years.

Alternative-fuel vehicles priced above GBP 40,000 (approximately Rs 50 lakh) will only become eligible for phased tariff reductions from the sixth year onwards.

Also read: https://fly-wheel.com/porsche-adds-virtual-gears-to-the-taycan-for-2027-makes-its-ev-feel-more-like-a-sports-car/

Final Take

The India-UK FTA could be one of the most significant developments for India’s luxury car market in recent years. While mainstream buyers are unlikely to feel the impact, customers shopping for British luxury and performance cars could save anywhere from a few lakhs to several crores.

 With McLaren and JLR already moving on pricing, the coming months could see British brands become considerably more competitive against their German and Italian rivals.