Business

British Luxury Cars and Whiskies Get Big Tariff Cuts in India

By Shilpa Dhamija14 mai 2025

Following a new Free Trade Agreement (FTA) signed last week with the United Kingdom, India is set to become a more attractive market for British luxury cars, whiskies and cosmetics due to a significant reduction in import duties.

Jaguar Land Rover currently owned by India’s Tata group, recently announced its full year results (+15%) (JLR)

For luxury auto-import tariffs on completely-built-units (CBUs) of petrol and diesel luxury cars made in the UK by brands such as Rolls Royce, Aston Martin, Bentley and Jaguar will be slashed from the existing, high 100%, to just 10% over a period of 10-15 years. The demand for top-end luxury cars has seen a significant uptick in India due to an increase in its wealthy population. In the calendar year 2023, Rolls Royce doubled its sales in India year-on-year.

Import duties for EVs will also be reduced, but the concessions will be limited to a few thousand units only as India prioritises the ‘Make-in-India’ campaign that encourages global auto makers to manufacture in India. India already hosts manufacturing and assembly facilities of several luxury auto makers such as BMW, Mercedes-Benz, Jaguar Land Rover and Audi, and plans to attract many more including Tesla.

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Jaguar Land Rover, currently owned by India’s Tata group, recently announced its full year results. The British origin auto brand recorded a revenue of £29.0 billion in the year ending March 2025 (FY25) with a profit before tax of £2.5 billion, up 15% year‑on‑year.

For the alcobev industry, India will immediately halve import tariffs on scotch whiskey and gin from 150% to 75%, with a further reduction to 40% over a period of 10 years. Scotch whiskey makes for nearly 75% of Scotland’s food and beverage exports, and India is its biggest importer. In the premium whisky segment, India is already the second largest global market for Scottish brand Glenlivet and Irish brand Jameson; both owned by French alcobev giant - Pernod Ricard. The reduction in import duties is likely to bring down the consumer price for both scotch whisky and British luxury cars in India, encouraging higher sales.

While India slashes import duties and facilitates easier market access for UK exports, it will, in return, receive tariff reductions on 99% of its exports to the UK.

Amid global uncertainties and shifting tariff policies two of the world’s top six economies have reaffirmed their commitment to strengthening bilateral trade. With this trade deal, India and the UK plan to double their bilateral trade from the current $60 billion to $120 billion by 2030.

Last year, India signed its first trade and economic partnership agreement with a European trade bloc - the EFTA (European Free Trade Association), which includes Switzerland. As part of this trade agreement, India will slash import duties on Swiss watch imports from 22% to 0 over a course of 7 years, making India an important growth market for Swiss watches.

India is also in talks with the European Union on a long-pending FTA. Both sides are working towards concluding the deal by year-end, following recent discussions between India’s Prime Minister Narendra Modi and EU President Ursula von der Leyen.

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