How Could the UK’s New Trade Deal with India Change the Game for Car Makers?
UK car manufacturers have been facing a tough road lately. Sales in Europe are stagnant, China’s appetite for imports is cooling, and the US market feels increasingly unpredictable. So, when a new trade agreement with India slashed tariffs on high-end British cars from a punishing 100% down to just 10%, it sent a jolt of excitement through the industry. Suddenly, the world’s most populous country—long considered out of reach for luxury exports—looks like a land of opportunity.
But is it really that simple? Not quite. While the tariff cut is a breakthrough, there are still plenty of hurdles to clear before British brands can truly cash in.
Why Has India Been So Hard for UK Car Brands to Crack?
Let’s be honest: India has always been a tough nut for foreign car makers, especially those selling premium or luxury vehicles. The main culprit? Sky-high import duties that doubled the price of an imported car overnight. That’s why, even though India imported £55 million worth of UK cars last year, it didn’t even make the top 10 destinations for British exports. In fact, Indian sales accounted for less than 1% of the UK’s total car exports.
With the new trade deal, that could change. Once the agreement is finalized, UK luxury brands will be able to compete on a more level playing field with high-spec models from other countries. There’s a catch, though: the deal comes with quotas, and similar limits will apply to Indian cars shipped to the UK. So, while the door is open, it’s not exactly a floodgate.
Is India Really the Next Big Growth Market for Cars?
On paper, India looks irresistible. It’s now the world’s fifth-largest economy, having just leapfrogged the UK, and is expected to become number three by 2028. The country’s GDP growth rate is the highest among G20 nations and is forecast to stay above 6% for at least the next five years, according to UK government estimates.
But here’s the kicker: car ownership in India is still astonishingly low—just 32 vehicles per 1,000 people, compared to around 300 in China. That gap spells massive potential. Tata Motors, one of India’s automotive giants, predicts passenger car sales will jump from 4.3 million last year to 6 million by 2030. The real engine of growth? India’s rapidly expanding class of affluent and ultra-wealthy households.
How Are British Luxury Brands Positioning Themselves for Success?
Some UK brands are already laying the groundwork. Take JLR (Jaguar Land Rover), owned by India’s Tata Group. They recently sold out a limited run of 12 Range Rover ‘Masara’ special editions—each costing £500,000—before the car was even shown publicly. The secret? Targeting India’s super-rich with exclusive experiences, like the Range Rover House in Alibaug, where guests can immerse themselves in luxury for a day.
Bentley is also making moves, launching Bentley India in partnership with Volkswagen Group and opening three new dealerships in key cities. While the company hasn’t explicitly credited the tariff cut, it’s clear the timing isn’t a coincidence. These brands are betting that India’s luxury market is about to blossom.
What About Mass-Market Brands—Can They Compete?
Here’s where things get tricky. The mainstream Indian car market is fiercely competitive and dominated by homegrown and Indo-Japanese players. Maruti-Suzuki alone controls 40% of the market, selling nearly 900,000 cars in the first half of the year. Mahindra, Hyundai, and Tata are close behind, while Toyota and Kia each hold about 7%.
European brands have found the going much tougher. Renault, for example, once aimed to sell 250,000 cars annually in India but managed just 16,000 in the first five months of this year—a 31% drop. The company hit pause on its Indian operations for four years, only recently restarting with new models and a fresh strategy.
Skoda, on the other hand, is starting to see some payoff after years of persistence. Their new Kylaq small SUV, priced at just £7,000, has struck a chord with Indian buyers, boosting sales by a staggering 142% this year. The secret sauce? Local sourcing and engineering tailored to Indian tastes and budgets.
What’s Holding Back Even Faster Growth?
Despite the optimism, the Indian car market isn’t an overnight goldmine. While monthly sales records are being set, wholesale deliveries to dealers rose just 1.3% in the first half of the year. Value-conscious consumers, complex regulations, and the dominance of established local brands mean that foreign car makers still face an uphill climb.
There’s also the matter of infrastructure—electric vehicles, for example, face challenges with charging networks and affordability. And while the new trade deal is a big step forward, its quota system means growth will be steady rather than explosive.
What’s the Real Opportunity for UK Car Makers in India?
The real prize isn’t just about selling more cars—it’s about tapping into a market that’s evolving fast. India’s middle class is growing, urbanization is accelerating, and tastes are shifting toward premium and electric vehicles. Brands that invest in understanding local preferences, build partnerships, and adapt their products stand the best chance of long-term success.
The big takeaway? Cracking the Indian market isn’t about perfection—it’s about smarter adjustments. Start with one change this week, and you’ll likely spot the difference by month’s end. For UK car makers, the road ahead in India is challenging, but the rewards could be game-changing for those willing to put in the work.