India has formally told the UK about a plan to reduce customs duties and import quotas for vehicles from the UK. This is part of the Comprehensive Economic and Trade Agreement (CETA) between the two countries, which starts on July 15. The Directorate General of Foreign Trade has released the procedure for importers to apply for these quota-based duty concessions.
From 110% to 10%: The Scale of the Tariff Cut
Under the terms of the agreement, India has committed to gradually reducing import duties on automobiles from the current rate of 110 percent down to 10 percent, based on a system of quotas phased in over a 10-to-15-year period. The concessional dispensation will apply to specified internal combustion engine passenger cars and goods vehicles, as well as electric, hydrogen, and hybrid passenger cars imported from the UK, with the new rates taking effect from July 15.
How the Quota System Works Across Engine Categories
The tariff reductions have been structured around distinct vehicle categories based on engine size and fuel type. In the first year of implementation, India will allow a combined total of 20,000 units of conventional-engine passenger cars to be imported across three separate categories at concessional rates.
Cars with engine sizes above 3,000cc for petrol variants and above 2,500cc for diesel variants will be eligible for a quota of 10,000 units with import duty cut from 110 percent to 30 percent in the first year. Mid-range vehicles, with engines between 1,500cc and 3,000cc for petrol or up to 2,500cc for diesel will receive a 5,000-unit quota with duty reduced from 66 percent to 50 percent. Mass-market vehicles with engines up to 1,500cc will similarly attract a 50 percent duty under a 5,000-unit quota.
Over 15 years India will permit the import of 3.78 lakh units of conventional-engine passenger cars from the UK at reduced rates.
Protections for Indias Mass-Market and EV Segment
The agreement protects Indias mass-market and electric vehicle industry. India has kept its market closed to vehicles priced below £40,000. No tariff concessions will be available for hybrid or hydrogen-powered vehicles during the first five years. From the year onward alternative-fuel vehicles priced between £40,000 and £80,000 will become eligible for a duty cut to 50 percent under a 400-unit quota. Vehicles priced above £80,000 will see duty fall to 40 percent under a 4,000-unit quota.
Early Market Response From Automakers
Beyond the automotive sector specifically, the India-UK CETA has been described by British officials as the most comprehensive trade deal India has operationalised to date, offering zero-duty access for 99 percent of Indian exports to the UK and opening up 137 service sectors for Indian companies. Jaguar Land Rover has announced price reductions for models imported from the UK. The price of the Range Rover SV was cut by Rs 75 lakh and the Range Rover Sport SV saw a Rs 40 lakh reduction.
Broader Economic Significance of the Deal
The India-UK CETA is described as the comprehensive trade deal India has operationalised. It offers zero-duty access for 99 percent of exports to the UK and opens up 137 service sectors for Indian companies. The agreement could raise UK GDP by £4.8 billion. Increase real wages by £2.2 billion over the long term.
What This Means for Car Buyers
For Indian consumers particularly those interested in luxury and premium vehicle segments the phased tariff reductions are expected to improve the competitiveness and pricing of British vehicles in the Indian market.
What Happens Next
With both governments having confirmed the July 15 implementation timeline back in June, providing businesses with roughly a month to align internal processes and complete necessary regulatory requirements, the coming weeks will likely see further announcements from automakers regarding pricing adjustments in response to the new tariff structure. As the phased quota system unfolds over the coming years, its effects on India’s automotive import landscape, and on the competitive dynamics between domestic manufacturers and UK imports, are likely to be closely watched by industry stakeholders on both sides.
