Why the UK trade deal didn’t reduce Defender prices, and the EU one might

The recently sealed India–EU Free Trade Agreement has sparked plenty of discussion around possible price cuts for imported luxury cars in India, including the Land Rover Defender. However, there were similar speculations last year as well when the India-UK FTA was signed. However, that deal didn’t help with the Defender prices. Let’s understand why.

Land Rover Defender price cuts: Why UK-FTA didn’t help but EU-FTA might

The key factor is where the Defender is built. The Defender is produced at JLR’s plant in Nitra, Slovakia. Since it is not UK-made, it did not qualify for the duty reductions under the India–UK FTA. However, since Slovakia has been an EU member since 2004, the Defender is eligible for price benefits under the recently signed India–EU FTA.Under proposed EU trade frameworks, import duties on EU-manufactured vehicles could be reduced from around 110 per cent to a phased range of roughly 10 to 40 per cent. However, these reductions would be gradual, with final implementation details still pending and subject to quotas of up to 2.5 lakh units annually.

To put this into perspective, a Defender 110 currently has a base cost of around Rs 35 lakh before duties. At a 40 per cent duty level, the landed cost including GST could hover around Rs 70 lakh. For the unversed, luxury cars are now taxed at a flat 40% GST, with the compensation cess removed, replacing the earlier 28% GST plus up to 22% cess.In the long term, if the import duties eventually drop to 10 per cent, the figure could come down closer to Rs 55 lakh. That said, by the time such low duty levels are reached, local assembly in India may already be in place, which would bypass CBU import taxes altogether.JLR had earlier hinted at plans to start local assembly of the Defender in India. Although no timeline has been announced, this move is expected to lower prices by around 20 per cent once it happens. Therefore, the key here to be seen is how the company strategises its allocation, manufacturing plans and overall pricing approach going forward.