India-UK Trade Pact Allows 3.78 Lakh Car Imports at Lower Duty
India will permit the import of 3.78 lakh units of conventional-engine passenger vehicles, including mass-market models, from the UK at reduced customs duty during the initial 15 years of the trade agreement between the two nations.
According to the agreement, tariffs on car imports will decrease from around 110 percent to 10 percent, accompanied by quotas for both parties.
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As per the India-UK CETA document published on Wednesday, India will gain entry to the UK's segment for electric, hybrid/hydrogen passenger cars, allowing duty-free exports to the UK starting in the sixth year for vehicles priced between GBP 20,000 and GBP 80,000, with an overall quota peaking at 88,000 units from the 15th year onward and extending into the following years.
This will advantage Indian producers like Tata Motors Passenger Vehicles, Mahindra & Mahindra, and Maruti Suzuki, among others. The two nations revealed that the comprehensive trade and economic partnership agreement (CETA) will be implemented starting July 15.
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For imports from the UK to India, the ceiling for conventional-engine passenger cars will reach its maximum in the fifth year across designated vehicle categories at 37,000 units, with the reduction in customs duties finalizing at 10 percent. The responsibilities will not be minimized beyond this.
During the first year, the limit for passenger vehicles with engine capacities exceeding 3,000 cc (petrol) and over 2,500 cc (diesel) is set at 10,000 units, with customs duty lowered to 30 per cent from 110 percent. For vehicles featuring an engine capacity of 1,500 cc (petrol), 2,500 cc (diesel), and 3,000 cc (petrol), the allowance stands at 5,000 units, with the duty lowered to 50 percent from 66 percent.
In the mass market category for engine sizes up to 1,500 cc, the permissible import limit in the initial year of the agreement is 5,000 units, with customs duty decreasing from 66 per cent to 50 per cent, according to the document.
An import of 20,000 passenger car units across the three categories will be permitted in the initial year of the agreement.
In the fifth year, the passenger car import quota for those with engine sizes exceeding 3,000 cc (petrol) and over 2,500 cc (diesel) is set at 19,000 units, whereas for vehicles with engines of 1,500 cc (petrol), 2,500 cc (diesel), and 3,000 cc (petrol), the limit is 9,000 units. A corresponding quota is established for cars with engine sizes of up to 1,500 cc at a concessional duty of 10 percent
India has not allowed entry for vehicles costing less than GBP 40,000 (CIF), providing total security for the mass-market EV sector where India aims for global dominance through local companies such as Tata Motors, Mahindra & Mahindra, and Maruti Suzuki.
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During the initial five years, India has not provided any concessions for electric, hybrid, or hydrogen passenger vehicles. However, starting from the sixth year, duties for vehicles priced from GBP 40,000 CIF to GBP 80,000 CIF (inclusive) will be cut to 50 percent, with a quota of 400 units. For vehicles costing over GBP 80,000 CIF, duties will be reduced to 40 percent, with an import cap of 4,000 units. In the tenth year, the customs duty will level out at 10 percent for both price categories of electric, hybrid, and hydrogen passenger vehicles.