New Delhi, Jul 24 (PTI) India has provided duty concessions to the UK auto exporters only on large petrol and diesel vehicles and high-priced EVs, while protecting sensitive segments of the domestic automotive industry especially mid and small cars and low-priced EVs under the trade pact, an official said.
No concessions are given to electric, hybrid, and hydrogen-powered vehicles in the first five years of the agreement.
The pact, officially called Comprehensive Economic and Trade Agreement (CETA), was signed in London on Thursday in the presence of Prime Minister Narendra Modi and his British counterpart Keir Starmer.
As per the pact, tariffs on automotive imports will go from about 110 per cent at present to 10 per cent under quotas on both sides.
The offered quota and duty reduction are more for the large engine capacity categories (above 3,000 cc petrol / 2,500 cc diesel).
"It ensures the domestic sector sufficient time to expand, innovate, and enhance global competitiveness in our area of strength in small (up to 1,500 cc) and mid segment (1,500–3,000 cc petrol / up to 2,500 cc diesel," the official said adding the duty reduction to 10 per cent will be done in over five years with quota.
Out of quota duty reduction is 50 per cent over 10 years.
"The concession framework is designed to provide market access to UK exporters mostly on large engine size ICE (internal combustion engine) vehicles and high price range EVs while simultaneously protecting sensitive segments of India's automotive industry (mid and small size engine capacity ICE vehicles and mid and low price range EVs)," the official said.
As per the details of the agreement, the number of vehicles from ICE engines shall get deducted by the number of EV vehicles getting concessions in the sixth year onwards to maintain the total quota volume of 37,000 units at the end of 15 years of duty concession.
For vehicles priced below British Pound 40,000 (CIF), no market access is provided, ensuring complete protection for the mass-market EV segment in which India seeks global leadership.
Market access in EV is given mostly in high-priced vehicles priced above British Pound 80,000 (CIF).
"India has secured market access to the tune of four times of its concession given to the UK on EV in the UK market," the government official said, adding India has extended a structured and balanced market access offer to the UK in the automobile sector under the trade agreement.
India's commitment is calibrated, phased, and development-oriented, quota-based liberalisation strategy.
This offer pertains exclusively to Completely Built Units (CBUs) of passenger vehicles encompassing Internal Combustion Engine (ICE) vehicles as well as electric, hybrid, and hydrogen-powered vehicles.
Commenting on the pact, think tank GTRI said this is India's first-ever auto tariff concession in any FTA, and it's likely to trigger similar demands from Japan, the EU, South Korea, and the US.
GTRI Founder Ajay Srivastava said India has opened a dedicated Tariff Rate Quota (TRQ) for passenger cars from the UK.
For large-engine petrol cars above 3000 cc and diesel cars over 2500 cc—traditionally luxury imports—India has committed to lowering the current over 100 per cent customs duty to 10 per cent over 15 years, within a quota starting at 10,000 units and rising to 19,000 in year five.
For mid-sized cars (1500–2500 cc diesel / up to 3000 cc petrol), a 50 per cent in-quota duty applies initially, falling to 10 per cent by year five, he said.
Small cars under 1500 cc follow a similar tariff reduction path with a growing quota.
"These in-quota vehicles enjoy sharply reduced duties, while out-of-quota imports still face tariffs ranging from 95 per cent to 50 per cent, depending on vehicle size and year," Srivastava said adding "the TRQ marks a major policy shift, especially as India has long used high tariffs to protect its domestic automotive industry".
By year five, up to 37,000 UK-built ICE vehicles could enter India annually at just 10 per cent duty—far below the current base rate of 110 per cent.
He said this creates a preferential entry path for high-end British brands such as Jaguar and Land Rover, both owned by Tata Motors, but also for other UK-based exports.
"While the measure is capped in volume and spread over 15 years, the policy sets a precedent in opening India's tightly controlled automobile market to bilateral trade partners—potentially triggering similar demands in future FTAs," he said.