India-UK Trade Deal Opens New Export Avenues for Auto Component Manufacturers

The India-UK Comprehensive Economic and Trade Agreement (CETA), which took effect on July 15, 2026, is providing a significant boost to Indian automotive component manufacturers. Companies like Brakes India have already begun leveraging the pact to fulfill new export orders, aiming to integrate India's manufacturing scale with British engineering expertise.

While the $86 billion auto component industry saw exports to the UK climb by nearly 11 percent to $801 million in the 2026 fiscal year, the sector faces a new reality. For the first time, the industry reported a trade deficit of $1.37 billion, as total imports surged by 13 percent to $25.4 billion, outpacing the 5 percent growth in exports.

The deficit is largely attributed to the rapid rise in electric vehicle sales, where domestic localization levels for components remain low. As the industry navigates this transition, the focus is shifting toward software-driven vehicle components and electric powertrain parts, with Europe remaining the largest export destination for Indian manufacturers seeking to balance their trade books.