India-UK CETA car import quotas set as auto tariffs fall from 110% to 10%

India and the UK have set phased import quotas and duty cuts for passenger cars under CETA. The deal starts on July 15. India will allow 3.78 lakh conventional-engine passenger cars from the UK. These imports will face concessional customs duty during the first 15 years.

Representative image

Under the trade pact, automotive import tariffs will drop from about 110 per cent to 10 per cent. Both countries will apply quotas. The India-UK CETA document was released on Wednesday. It details separate rules for conventional cars and for electric, hybrid, or hydrogen passenger cars.

India-UK CETA passenger cars: conventional imports and duty cuts

For UK exports to India, the quota for conventional-engine passenger cars will peak in the fifth year. It will cover specified vehicle categories and reach 37,000 units. By then, customs duties will fall to 10 per cent. The document says duties will not drop below 10 per cent.

In the first year, India will allow 10,000 cars with over 3,000 cc petrol engines. It will also allow cars above 2,500 cc diesel. For these, duty will fall to 30 per cent from 110 per cent. The quota totals form part of the first-year cap.

Also in the first year, another category will get a 5,000-unit quota. This covers 1,500 cc petrol, 2,500 cc diesel, and 3,000 cc petrol engines. Duty will reduce to 50 per cent from 66 per cent. The document lists this as a separate band.

The mass market segment is included under the pact’s conventional car rules. For engines up to 1,500 cc, the first-year import quota is 5,000 units. Customs duty will be reduced to 50 per cent from 66 per cent. Across all three categories, 20,000 cars are allowed in year one.

In the fifth year, the quota rises across categories at a lower duty level. More than 3,000 cc petrol and over 2,500 cc diesel cars get 19,000 units. The 1,500 cc petrol, 2,500 cc diesel, and 3,000 cc petrol band is capped at 9,000 units. Up to 1,500 cc is set at 10 per cent concessional duty.

From the 15th year, the total quota will stay fixed at 15,000 units each year. Duties will remain at 10 per cent across the three conventional categories. India’s overall allowance across 15 years totals 3.78 lakh units. This count includes conventional cars in the mass segment.

India-UK CETA electric vehicles: access, price bands and exclusions

The document says India has not opened its market for vehicles priced below GBP 40,000 CIF. This aims to protect the mass-market EV segment. It notes India seeks leadership through homegrown firms. The text names Tata Motors and Mahindra & Mahindra, besides Maruti Suzuki.

India also does not offer concessions for electric, hybrid, or hydrogen passenger cars in the first five years. From the sixth year, vehicles priced between GBP 40,000 CIF and GBP 80,000 CIF inclusive face 50 per cent duty. The quota for this band is 400 units. Vehicles above GBP 80,000 CIF face 40 per cent duty with a 4,000-unit limit.

By the tenth year, customs duty is set to stabilise at 10 per cent for both EV price segments. The document also sets limits for the UK market. India will get access to the UK’s electric and hybrid/hydrogen passenger cars segment. Duty-free exports start from the sixth year for prices from GBP 20,000 to GBP 80,000.

Under that UK access plan, the total quota will rise over time. It will reach a peak of 88,000 units from the 15th year. The document says the peak continues in the years after that. It adds that Indian manufacturers are expected to benefit. The companies listed include Tata Motors Passenger Vehicles, Mahindra & Mahindra, and Maruti Suzuki.

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.

CETA sets separate pathways for conventional cars and newer powertrains. Conventional passenger car imports from the UK will be managed through quotas and duties ending at 10 per cent. EV-related concessions begin later and stay within set price bands. The document also keeps certain zero-emission two-wheelers, buses, and trucks outside duty-cut commitments.

With inputs from PTI