Mercedes-Benz and BMW have termed the India-UK free trade agreement (FTA) a positive development while noting that it would not have much bearing on the prices of luxury cars in the country.

Last week, India and the UK sealed a landmark FTA that will lower tariffs on 99 % of Indian exports and would make it easier for British firms to export whisky, cars and other products to India, besides boosting the overall trade basket. 

The aim is to double two-way commerce by 2030 from the present $60 billion India has included adequate safeguards in the agreement to protect its sensitive sectors and in the automobile segment, the import duty will be reduced over 10-15 years. 

The duty concession on imports of petrol and diesel engine vehicles from the UK is limited to a pre-defined quota.

“Fundamentally, we have always advocated free trade as a multinational company, because we feel that free trade helps in better growth... So I think for us, definitely it's a real welcome move, because it helps,” Mercedes-Benz India MD and CEO Santosh Iyer told PTI.

He noted that there is an expectation of price cuts for cars due to the India-UK pact and also because of the under-discussion India-EU FTA. “Around 95% of the cars we (industry) sell in India are all CKDs. Which means hardly 15-16% duty even today. S

o to expect a huge price correction, I don't think it would happen even with an FTA,” Iyer said. The second critical factor is the quota-based system for imported cars, he added. 

BMW Group India President and CEO Vikram Pawah said the automaker supports free market access and reduction of trade barriers as it's a win-win situation for overall economic growth and benefits the consumers.