Indian Auto Industry's Cautious Stance on UK FTA

The Indian automobile industry has expressed caution regarding the Free Trade Agreement (FTA) with the UK, which proposes to reduce import duties to 10%. Companies are awaiting detailed information, concerned that lower tariffs might set a precedent for other trade agreements. A major worry is the potential for "dumping of cheap Chinese parts and aggregates" in the UK, which could then find their way to India as fully-built products.

Seeking Clarity on Import Duties and Quotas

While the reduction in duties on Indian parts exported to the UK has been welcomed, car manufacturers are seeking clarity on several fronts. Key concerns include the timeline for the reduction of import duties on UK cars to 10% and the annual quota of cars that can be imported under these lower tariffs.

Potential Benefits for UK Manufacturers

UK-based manufacturers such as Jaguar Land Rover (JLR), Bentley, Aston Martin, Rolls Royce, Lotus, and McLaren stand to benefit from the lower import duties. Although these are niche brands, mainstream manufacturers like Nissan and Toyota, which also have operations in the UK, might consider importing select models to India at reduced tariffs.

Concerns Over Chinese Components

The Indian industry is particularly wary of the UK potentially sourcing inexpensive Chinese batteries, motors, and other components, which could then be diverted to India under the FTA. There is a call for stringent rules of origin and local value addition criteria to prevent such practices.

Opportunities for Indian Two-Wheeler Manufacturers

On a positive note, Indian two-wheeler companies like TVS, which owns the UK brand Norton, view the FTA as an opportunity to expand their market presence and leverage common supply chains for faster scaling.

Expert Opinions on the FTA's Impact

Experts believe that the agreement will primarily benefit auto component makers by opening up the UK market further. While Indian consumers might gain access to premium UK cars at competitive prices, the preference for affordable options is expected to keep the local car market relatively stable.