New Delhi, July 11: India has officially notified the operational framework for importers seeking concessional customs duty benefits on passenger and commercial vehicles from the United Kingdom under the India-UK Comprehensive Economic and Trade Agreement (CETA), which comes into effect on July 15. The move marks a major step in implementing the automobile-related commitments of the landmark bilateral trade pact while ensuring imports remain within predetermined tariff-rate quotas.
The Directorate General of Foreign Trade (DGFT), through a public notice issued on July 9, detailed the mechanism for allocating Tariff Rate Quotas (TRQs) that will allow eligible importers to bring UK-manufactured vehicles into India at significantly lower customs duties than those currently applicable.
Eligibility Limited to Authorised Importers
According to the notification, only Original Equipment Manufacturers (OEMs) and their officially authorised dealers or channel partners will be eligible to apply for TRQ certificates. Applicants must also furnish a valid pre-purchase agreement issued by a UK-based vehicle manufacturer specifying the quantity of vehicles proposed for supply during the relevant quota year.
In addition, every import consignment seeking concessional duty treatment must be accompanied by a valid Certificate of Origin issued by the designated authorities in the United Kingdom, confirming that the vehicles satisfy the rules of origin prescribed under the trade agreement.
Calendar-Year Based Quota System
The DGFT clarified that tariff quotas will be administered on a calendar-year basis, running from January 1 to December 31. Authorities will continuously monitor allocations, and once the notified quota limit is exhausted, no additional TRQ certificates will be issued for that year.
Each certificate will remain valid for up to 12 months or until the end of the calendar year, whichever occurs earlier. Importers have also been encouraged to ensure that the financial benefit arising from lower customs duties is ultimately passed on to consumers through competitive pricing.
Sharp Duty Reductions Under CETA
The India-UK trade agreement introduces one of the most significant tariff liberalisation measures in the automobile sector. Import duties on eligible vehicles from the UK will gradually decline from existing levels of around 110 per cent to 10 per cent, subject to annual quota limits.
The concessional duty regime is designed to provide controlled market access while safeguarding India’s domestic automobile industry through phased implementation and volume restrictions.
Passenger Vehicle Quotas Expanded Over Time
India has agreed to permit imports of up to 3.78 lakh conventional-engine passenger vehicles from the UK over the first 15 years of the agreement.
The annual quota will progressively increase before stabilising in the fifth year at 37,000 vehicles across specified passenger vehicle categories. The customs duty applicable under the agreement will eventually settle at 10 per cent, without any further reduction beyond that level.
First-Year Import Limits Defined
For the first year of implementation, India has established separate quotas based on engine capacity and vehicle segment.
Luxury passenger vehicles equipped with petrol engines above 3,000 cc or diesel engines exceeding 2,500 cc will be eligible for imports of up to 10,000 units, with customs duty reduced from 110 per cent to 30 per cent.
Mid-range vehicles with petrol engines between 1,500 cc and 3,000 cc, and diesel engines up to 2,500 cc, will have a quota of 5,000 units, attracting customs duty of 50 per cent instead of the existing 66 per cent.
Similarly, mass-market passenger vehicles with petrol engines up to 1,500 cc will also receive a quota allocation of 5,000 units, with duties reduced from 66 per cent to 50 per cent.
Overall, India will permit imports of 20,000 passenger vehicles under the preferential tariff arrangement during the first year of the agreement.
Protection for Domestic Electric Vehicle Industry
While the agreement opens the market for conventional vehicles under regulated quotas, India has retained substantial protection for its domestic electric vehicle manufacturing ecosystem.
The government has excluded vehicles priced below GBP 40,000 (CIF) from concessional treatment, effectively shielding India’s mass-market electric vehicle segment where manufacturers such as Tata Motors, Mahindra & Mahindra, and Maruti Suzuki continue to expand production and investments.
Electric Vehicle Benefits Deferred
The agreement also postpones tariff concessions for electric, hybrid and hydrogen-powered passenger vehicles during the first five years.
Beginning in the sixth year, electric and alternative-fuel vehicles valued between GBP 40,000 and GBP 80,000 (CIF) will be eligible for imports at a reduced customs duty of 50 per cent, subject to an annual quota of 400 units.
Vehicles priced above GBP 80,000 (CIF) will qualify for a customs duty of 40 per cent, with imports capped at 4,000 units annually under the preferential arrangement.
Balanced Trade Liberalisation Strategy
The notification reflects India’s calibrated approach to implementing its commitments under CETA by combining gradual tariff reductions with carefully managed import quotas. Officials believe the framework will facilitate greater market access for premium UK automobiles while preserving adequate policy space for India’s expanding domestic automobile and electric mobility industries.
With the agreement set to become operational from July 15, eligible importers can now begin applying for tariff-rate quota allocations under the newly notified procedure, paving the way for the first consignments of UK vehicles to enter India under the preferential duty regime.