India will allow the import of 3.78 lakh (378,000) passenger cars from the United Kingdom at concessional duties over the first 15 years of the Comprehensive Economic and Trade Agreement (CETA), according to the Economic Times. Import duties on automotive products will fall from about 110% to 10%, with quotas on both sides. The pact takes effect on July 15.
Quota Phasing and Duty Reductions
According to the CETA document released on Wednesday, a total of 20,000 units of passenger cars across three categories will be allowed in the first year. The categories are based on engine size and fuel type:
- Category A: Engine >3,000 cc (petrol) or >2,500 cc (diesel)
- Category B: Engine 1,500 cc (petrol), 2,500 cc (diesel), or 3,000 cc (petrol)
- Category C: Engine up to 1,500 cc
In the first year, only Category C receives a specific quota: 5,000 units with customs duty reduced to 50% from 66%. The remaining 15,000 units are distributed across Categories A and B, though exact allocations are not detailed in the source.
By the fifth year, quotas expand:
- Category A: 19,000 units
- Category B: 9,000 units
- Category C: 9,000 units (at 10% concessional duty)
From the 15th year onward, the total quota stabilizes at 15,000 units annually with duties fixed at 10% across all three categories.
| Category | Year 1 Quota | Year 1 Duty | Year 5 Quota | Year 5 Duty | Year 15+ Quota | Year 15+ Duty |
|---|---|---|---|---|---|---|
| A | Not specified | Not specified | 19,000 | Not specified | Included in 15,000 total | 10% |
| B | Not specified | Not specified | 9,000 | Not specified | Included in 15,000 total | 10% |
| C | 5,000 | 50% | 9,000 | 10% | Included in 15,000 total | 10% |
Electric and Hybrid Vehicles
In the first five years, India has granted no concessions for electric, hybrid, or hydrogen passenger cars, the Economic Times reported. From the sixth year, concessions begin:
- Vehicles priced between £40,000 CIF and £80,000 CIF: duty reduced to 50% with a quota of 400 units.
- Vehicles priced above £80,000 CIF: duty reduced to 40% with a quota of 4,000 units.
- In the tenth year, customs duty stabilizes at 10% for both price segments with no quota mentioned.
Additionally, India will get duty-free access to the UK market for electric, hybrid, and hydrogen passenger cars in the price range of £20,000 to £80,000 from the sixth year, with the total quota reaching a peak of 88,000 units from the 15th year and continuing thereafter. This benefits Indian manufacturers such as Tata Motors Passenger Vehicles, Mahindra & Mahindra, and Maruti Suzuki, among others.
Exclusions and Market Protection
Notably, India has not opened its market for vehicles priced below £40,000 CIF, ensuring complete protection for the mass-market EV segment where Indian firms aim for global leadership, the Economic Times noted. Zero-emission vehicles—including two-wheelers, buses, and trucks—are excluded from any commitment to reduce or eliminate customs duties under the agreement.
The CETA, announced by the two countries, will take effect on July 15. The phased reduction of duties from approximately 110% to 10% over 15 years represents a significant liberalization of India's automotive market for UK imports, while maintaining protective quotas and exclusions for sensitive segments.
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