India-UK Trade Pact: Duty Concessions On High-End Vehicles While Protecting Local Industry
No concessions are given to electric, hybrid, and hydrogen-powered vehicles in the first five years of the agreement.
India has provided duty concessions to the UK auto exporters only on large petrol and diesel vehicles and high-priced electronic vehicles, 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, 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% at present to 10% under quotas on both sides.
The offered quota and duty reduction is more on 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% will be done in over five years with quota.
Out of quota duty reduction is 50% in over 10 years.
"The concession framework is designed to provide market access to UK exporters mostly on large engine size 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 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.
"India has secured market access to the tune of four times of its concession given to UK on EV in 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 liberalization strategy.
This offer pertains exclusively to Completely Built Units of passenger vehicles encompassing Internal Combustion Engine vehicles as well as electric, hybrid, and hydrogen-powered vehicles.
