Synopsis
India will allow the import of 3.78 lakh conventional-engine passenger cars from the UK at lower customs duties under the India-UK trade agreement. The pact also opens export opportunities for Indian automakers in the UK’s electric and hybrid vehicle market.
India has agreed to allow the import of 3.78 lakh conventional-engine passenger vehicles from the United Kingdom at reduced customs duties under the Comprehensive Economic and Trade Agreement (CETA) between the two countries.
According to the agreement details released on Wednesday, India will permit imports of UK-made conventional-engine passenger vehicles over a 15-year period at concessional duty rates. The import quota will gradually increase before stabilizing in later years.
In the first year of the agreement, India will allow the import of 20,000 passenger cars across different engine categories. Premium vehicles with engine capacities above 3,000 cc for petrol and 2,500 cc for diesel will be eligible for a reduced customs duty of 30%, down from the current 110%.
For mid-sized and mass-market vehicles, customs duties will be reduced to 50% from 66%, with specified import quotas under each category.
By the fifth year, the annual import quota for conventional-engine passenger vehicles will rise to 37,000 units, while customs duties across categories will eventually decline to 10%. From the fifteenth year onward, the annual quota will remain fixed at 15,000 units, with duties maintained at 10%.
The agreement also provides a significant opportunity for Indian automakers to expand exports to the UK. Indian manufacturers will gain access to the UK’s electric, hybrid, and hydrogen-powered passenger vehicle market through a phased duty-free export framework.
Starting from the sixth year of the agreement, India will be allowed to export vehicles priced between GBP 20,000 and GBP 80,000 to the UK without customs duties. The export quota will gradually increase and is expected to reach 88,000 units annually by the fifteenth year.
To protect India’s domestic electric vehicle industry, the government has kept restrictions on lower-priced imported EVs. Vehicles priced below GBP 40,000 will not receive any duty concessions, shielding the mass-market EV segment where Indian companies have built a strong presence.
The agreement also adopts a cautious approach toward imported electric, hybrid, and hydrogen-powered cars from the UK. No tariff concessions will be offered during the first five years. Beginning in the sixth year, limited import quotas will be introduced with reduced duties, which will gradually decline to 10% by the tenth year.
At the same time, India has excluded zero-emission two-wheelers, buses, and trucks from any tariff reduction commitments under the agreement. As a result, these vehicle categories will continue to attract existing customs duties without preferential treatment.