India offers UK an EV trade-off: Luxury imports for budget exports

India has offered to allow unlimited imports of electric vehicles priced more than GBP 80,000 (about ₹89 lakh) from the UK in lieu of a larger export quota of smaller EVs priced less than GBP 40,000 (₹44 lakh) to the country in a bid to iron out differences holding up finalisation of a free trade agreement (FTA).

The proposal, if agreed upon by both countries, will benefit Indian automakers like Maruti Suzuki and Mahindra & Mahindra, which have firmed up plans to scale up EV exports to Europe to leverage economies of scale while the segment matures locally. Tata Motors' owned British luxury car maker Jaguar Land Rover (JLR) similarly would be able to step up exports of EVs from the UK for sale in India. The company currently sells a sole EV model-Jaguar I-Pace-in India.

People aware of the developments told ET negotiations are progressing well with British authorities.

"UK is keen on concessional tariffs on electric vehicles priced at the more premium end of the market. What we have told them is that we would not place any cap on the number of vehicles priced above GBP80,000 that they can ship to India, if they are to agree on a larger quota for low-cost EV imports from India into the UK. We feel it will be a win-win solution for both countries, as neither UK nor Europe can compete with India in terms of the cost of manufacturing," a person in the know said on condition of anonymity.

India-UK parleys on the FTA come at a time when economies worldwide are reeling from the impact of US President Donald Trump proposed new 'reciprocal tariffs' on select countries though the plan has been paused for 90 days, except for China.

India is likely to discuss a mutual quota model with the US too for permitting exports from American carmaker Tesla during talks with the Trump administration for the proposed bilateral trade agreement (BTA).

"We have been having negotiations with the UK and EU for some time now. And these agreements can provide a framework for our discussions on the BTA with the US too since they are all quite similar economies," the person said, adding the overall aim is to widen the scope of India's trade pacts for accelerating development.

Tariffs on automobiles and whiskey are the two major items, which have so far stalled finalisation of the India-UK FTA. India and the UK resumed negotiations on the FTA this February. The FTA aims to double or even triple India-UK bilateral trade to $40-60 billion from the current $20 billion over the next decade.

"The UK is one of the countries with which India is fast tracking its trade pact," said a government official.

India exported $12 billion worth of goods to the UK during the April to January period of the last fiscal year while importing goods worth $7.28 billion. In FY24, India's goods exports to the UK were $12.9 billion, higher than $11.4 billion in 2022-23. Imports in those two years were $8.4 billion and $8.9 billion, respectively.

The commerce and industry ministry didn't respond to email queries.