India’s recent free trade agreement (FTA) with the UK is not expected to significantly shift the luxury automobile landscape, according to Santosh Iyer, MD of Mercedes-Benz India (MBIL), the nation’s largest luxury car brand.
Despite potential tariff reductions favoring British automaker Jaguar Land Rover (JLR), Iyer emphasized that 95% of Mercedes’ Indian sales stem from locally assembled vehicles, which already enjoy a relatively low 15% import duty. “We’re open to FTAs,” Iyer stated, “but this one involves quotas and doesn’t eliminate duties. Only a limited number of high-end models are fully imported.”
Most luxury vehicles sold in India fall under the CKD (completely knocked down) category, already taxed at the concessional 15% rate. While BNP Paribas Exane projects the CKD duty could reduce further to 11.5%, the actual impact will be minor, said experts.
The new FTA stipulates that completely built vehicles priced above $40,000 will see their duties halved to 50%, while those under that price could attract only 10% duty, down from 70%. JLR, which assembles several models in India through Tata Motors at its Pune facility, may benefit — but the gains will largely apply to a niche market.
Meanwhile, Mercedes-Benz India announced a price hike of up to 3%, effective in two phases (June and September), to address rising input and forex costs. Iyer projects stagnant growth for the luxury car segment in 2025, hovering around 50,000 units.
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