Mercedes-Benz, BMW welcome India-UK FTA; say no impact on pricing
What's the story
Luxury car makers, Mercedes-Benz and BMW, welcomed the recent Free Trade Agreement (FTA) between India and the UK.
However, they clarified it wouldn't significantly impact the pricing of high-end vehicles in India.
The FTA seeks to cut tariffs on 99% of Indian exports and help British companies export goods like whisky and cars to India.
Trade impact
FTA to boost trade, but not car prices
The main aim of the India-UK FTA is to double bilateral trade by 2030 from the current $60 billion.
To safeguard sensitive sectors in India, the deal has adequate safeguards. In the automobile sector, import duty will be gradually reduced over 10-15 years.
However, Mercedes-Benz India's MD and CEO Santosh Iyer believes this won't result in drastic price cuts of cars in India.
Quota effect
Quota-based system limits impact on car prices
Iyer also highlighted that nearly 95% of cars sold in India are Completely Knocked Down (CKD) units, which now attract a 15-16% duty.
He said, "So to expect a huge price correction, I don't think it would happen even with an FTA."
Another important factor that could restrict the FTA's impact on car prices is the quota-based system for imported cars.
Local production
BMW supports free trade, awaits more details
BMW Group India's President and CEO Vikram Pawah also welcomed the FTA.
He said his company supports unrestricted market access and lowering trade barriers as it benefits overall economic growth and consumers.
"India-UK FTA seems to be a landmark deal covering various aspects of mutual trade in goods, services, and mobility," he added.
However, he said the impact on India's luxury segment would be clear with more information about the finer details of the agreement.
Price hike
Mercedes-Benz India to raise prices
In other news, Mercedes-Benz India announced plans to increase ex-showroom prices of its models in two stages this year.
The company said that this move is aimed at partially offsetting the impact of significant foreign exchange fluctuations.
Despite the FTA, these price hikes indicate that external factors continue to influence luxury car pricing in the Indian market.