Auto cos fear lower UK tariffs may lead to Chinese dumping

Time of India

07-05-2025

New Delhi:
The Indian automobile industry reacted with caution to FTA with the UK, which aims to reduce import duty to 10%. Companies, which are awaiting finer details, fear that lower tariff rates may be replicated in other trade agreements under discussion. They are also concerned about the possibility of "dumping of cheap Chinese parts and aggregates" in the UK, which could then be diverted to India as fully-built products.While the Indian component industry welcomed the move, as duty on imports of India's parts to the UK will be slashed to zero, car companies remain tense in the absence of clarity. The auto industry is looking for details, such as by when (time period) the import duty for cars from the UK will come down to 10%. "Also, we would like to understand what is the quota that has been specified. This means how many cars will be allowed to be imported under the lower tariffs every year," company officials and industry association executives told TOI.Some of the brands that are manufacturing in the UK and will benefit from lower import duty, include Tatas-owned Jaguar Land Rover (JLR), luxury makers Bentley, Aston Martin, Rolls Royce, Lotus, and McLaren.These are, however, limited volume brands and may not have a direct bearing on the mainline brands. However, the UK also has factories of mainstream auto companies, such as Nissan and Toyota, who could now look at importing some of their models here at lower duty.Regarding Chinese threat, Indian industry fears UK companies may source cheap Chinese batteries, motors and other parts to UK and divert them to India at lower prices using FTA. "We hope govt would have negotiated the clause around rules of origin, local value addition, and change in tariff heading to ensure that dumping from China can be contained. Only products with a substantial UK value addition should be allowed under FTA," officials said.On the two-wheeler front, companies like TVS, which has a UK brand, welcomed the deal. "It creates large opportunities for Indian companies like ours to expand further and access new markets... Our British brand Norton will launch later this year and this agreement will help us scale faster and leverage common supply chains," Sudarshan Venu, MD of TVS Motor, said.Saurabh Agarwal, partner & automotive tax leader at EY India, said the deal will help auto component makers sell more in UK. "Indians might be able to buy premium cars from UK at right price point as soon as they are launched globally. It probably won't shake up our local car manufacturers too much because most Indian consumers still prefer more affordable options."