UK auto industry pushes for lower import tariffs in India amid trade tensions

The UK automotive industry is calling for lower import tariffs in India as trade tensions escalate globally. With fully built cars currently attracting a 70% duty in India, Mike Hawes, President of the UK Motor Trade Association, has emphasised the need for a balanced trade deal that benefits both nations. “We’d like to see that come down,” he said in an interview with CNBC-TV18, adding that discussions with the UK government on this issue are ongoing.

The urgency for an India-UK Free Trade Agreement (FTA) has grown amid the latest round of global trade disputes. The imposition of a 25% tariff on vehicle exports to the US is expected to significantly impact manufacturers. “That is a huge cost that you cannot absorb as a manufacturer,” Hawes said. “It is inflationary and also suppresses demand.” The UK government is being urged to negotiate a deal that could mitigate the impact of these tariffs.

The effect on UK luxury car manufacturers remains uncertain. Brands like Jaguar Land Rover, Rolls-Royce, Bentley, McLaren, and Aston Martin, which primarily sell to high-net-worth individuals in US, may still see demand, but buyers might delay purchases in hopes of future tariff reductions. This creates short- to medium-term production uncertainties, Hawes added.
Concerns about potential job losses in the UK auto sector are also rising. While it is too early to provide exact estimates, reduced production could impact employment, particularly for temporary workers who act as a buffer during demand fluctuations. “There’s always some flex in the system. This will push that flex to the maximum,” Hawes noted, adding that manufacturers will focus on retaining skilled employees despite the economic strain.

Beyond the UK, the wider global economy faces the risk of recession due to tariff disputes. According to Hawes, the 10% broader tariffs being imposed worldwide could have far-reaching consequences, affecting supply chains and consumer demand. Additionally, China has retaliated against US tariffs by imposing a 34% levy on US imports, signalling an escalation in trade conflicts that could disrupt multiple industries, including automotive.

Hawes pointed out that no country is immune to these shifts. “The short answer is that everyone is affected. The US is too big a market,” he said, explaining that even countries not directly targeted by tariffs will feel the spillover effects. Many automakers have sought to mitigate risks by establishing manufacturing plants in key markets like Korea, but disruptions in trade flows could still have unintended consequences, he said.