Shares of India's top automakers slipped in early trade on Friday after India signed a free trade agreement (FTA) with the United Kingdom, its first major trade pact in over a decade.
The deal, which aims to deepen economic integration between the two nations, includes significant concessions on import duties for large internal combustion engine vehicles and high-end electric vehicles, likely sparking concerns over increased competition in the premium auto segment.
Mahindra & Mahindra fell 1.12%, Tata Motors declined 0.78%, and Maruti Suzuki was down 0.89% as investors reacted to the implications of the new trade terms.
The agreement will immediately reduce import duties on select vehicles from 115% to 75%, with a further reduction to 40% over the next ten years.
The concessions apply specifically to ICE vehicles with engine capacities above 3,000cc for petrol and 2,500cc for diesel, as well as EVs priced above £80,000. However, there will be no concessions on electric, hybrid, or hydrogen vehicles for the first five years of the pact.
It is anticipated that the duty cuts could open the door for UK-based luxury carmakers to enter the Indian market more competitively, potentially impacting domestic pricing and market share.
The broader scope of the India-UK FTA spans 26 chapters, covering trade in goods and services, intellectual property rights, and investment. It has been described by both governments as a modern and comprehensive agreement, designed to foster long-term economic collaboration.
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