India to Allow Reduced-Duty Import of 3.78 Lakh UK Cars in First 15 Years of Trade Pact

• India will allow import of 3.78 lakh conventional-engine passenger cars from the UK over the first 15 years of the pact.

• Duties on automotive imports will fall from about 110% to 10% under quota-based access.

• The agreement keeps mass-market EVs protected while giving India duty-free access to certain UK electric, hybrid and hydrogen cars from the sixth year.

India will allow the import of 3.78 lakh units of conventional-engine passenger cars, including those in the mass segment, from the UK at concessional customs duty during the first 15 years of the implementation of the trade pact between the two countries.

Under the pact, tariffs on automotive imports will fall from about 110% to 10%, with quotas on both sides.

According to the India-UK CETA document, released on Wednesday, India will get access to the UK's electric, hybrid/hydrogen passenger cars segment with duty-free exports to that country from the sixth year in the price segment ranging from GBP 20,000 to GBP 80,000, with the total quota reaching a peak of 88,000 units from the 15th year and continuing in the subsequent years.

This will benefit Indian manufacturers such as Tata Motors Passenger Vehicles, Mahindra & Mahindra, and Maruti Suzuki, among others.

The two countries announced the implementation of the comprehensive trade and economic partnership agreement (CETA) from July 15.

For imports from the UK to India, the quota for conventional-engine passenger cars will peak in the fifth year across specified categories of vehicles at 37,000 units, with customs duties reduction reaching a final 10%. The duties will not be reduced beyond this.

In the first year, the quota for passenger cars of engine size more than 3,000 cc (petrol) and over 2,500 cc (diesel) is 10,000 units, with customs duty being reduced to 30% from 110%.

For cars with engine size of 1,500 cc (petrol), 2500 cc (diesel) and 3,000 cc (petrol), the quota is 5,000 units, with duty being reduced to 50% from 66%.

In the mass market segment of engine size of up to 1,500 cc, the allowed quota of import in the first year of the pact is 5,000 units, with customs duty being reduced to 50% from 66%, as per the document.

A total of 20,000 units of passenger cars across the three categories will be allowed to be imported in the first year under the agreement.

In the fifth year, the import quota for passenger cars of engine size more than 3,000 cc (petrol) and over 2,500 cc (diesel) is 19,000 units, while for cars with engine size of 1,500 cc (petrol), 2,500 cc (diesel) and 3,000 cc (petrol), the import quota is capped at 9,000 units, and a similar quota is fixed for cars with engine size of up to 1,500 cc at 10% concessional duty.

From the 15th year, the total quota will remain constant at 15,000 units annually with duties fixed at 10% across the three categories.

India has not opened its market for vehicles priced below GBP 40,000 (CIF), ensuring complete protection for the mass-market EV segment in which India seeks global leadership through its homegrown firms like Tata Motors and Mahindra & Mahindra, besides Maruti Suzuki.

In the first five years, India has not given any concessions for electric/ hybrid/hydrogen-passenger cars, but from the 6th year, such vehicles priced between GBP 40,000 CIF to GBP 80,000 CIF (inclusive), the duties will be reduced to 50% with a quota size of 400 units, while for those vehicles priced above GBP 80,000 CIF, the duties will be lowered to 40% with an import limit of 4,000 units.

In the tenth year, the custom duty will stabilise at 10% for the two price segments of electric/ hybrid/hydrogen-passenger cars.

It added that, notwithstanding anything provided in this pact, zero emission vehicles (electric or hydrogen fuel vehicles), which are two-wheeled vehicles, buses or trucks, are excluded from any commitment or obligation to reduce or eliminate. Customs duty on a good and no preferential customs duty concessions shall be implemented by India on that good under this agreement.