India could benefit from free trade in long term: Mercedes-Benz India MD & CEO

Mercedes-Benz India Managing Director and CEO Santosh Iyer

India could be a beneficiary in the long-term from the ongoing tariff war that could lead to better trade and lowering of barriers, even though there can be short-term shocks, according to Mercedes-Benz India Managing Director and CEO Santosh Iyer.

While the Indian automotive segment is not directly impacted by US President Donald Trump's tariff war, Iyer told PTI that consumer sentiment in the luxury segment is still positive despite a highly volatile scenario globally due to the current geopolitical situation, currency fluctuations and supply chain concerns.

"For the first time, we are discussing about opening up of our borders and also opening for two-way trade. Generally, we have always advocated for more open and fair trade policies that help foster global economic growth and drive innovation as well," he said when asked about the overall impact of the ongoing tariff war.

The free trade, based on low tariffs and reduced trade barriers, has significantly increased international trade benefiting economies and communities, he asserted.

"Surely, we support cooperation among the larger economies to reduce the trade barrier and they should help in the long run. In the short term, there may be shocks, but in the long run, better trade and lowering of the trade barriers and better two-way movement of goods and services is always beneficial for the economy as such," Iyer noted.

In the long run, he said, "There is an increased confidence that trade will continue and India will only benefit more from the current geopolitical setup. So overall, we still see the sentiments to be there".

Iyer pointed out that "there can also be a scenario where India gets benefited because of this overall geopolitical shift...so we have to wait and watch how it develops".

On the impact of the tariff war on the Indian automotive sector, he said, "We in the automotive segments are not directly impacted. Most of the cars are made here as such. That's not the biggest impact".

However, the indirect impact of the tariff war has led to currency fluctuation, with the rupee depreciating, and making the automobile makers, especially in the luxury segment, hike the prices of their vehicles.

"So, this can have an impact on the demand," Iyer said, adding any disruptions in the supply chain due to geopolitical issues could impact sales.

On the outlook for the luxury segment in India, he said, "At this stage, we expect the market to be a bit flattish or maybe some growth may still come in from the market".

He said a large section of customers, including those involved in exports in places like Agra are still upbeat and there are no negative sentiments.

The growth in the first quarter of the total luxury segment in 2025 has been almost flattish and is expected to continue to remain flat for the rest of the year due to the current uncertainties in the global geopolitical and economic environment, he said, adding that "in the second half of the year, if things are sorted and if there are trade agreements are in place, then you can look at a positive upside to the market".

In FY25, the overall luxury car segment is estimated to be at over 51,500 units compared to about 49,800 units in FY24.