The India-UK Comprehensive Economic and Trade Agreement (CETA), which comes into force on July 15, is set to create a significant export opportunity for Indian automakers by opening duty-free access for up to 88,000 electric, hybrid and hydrogen-powered passenger vehicles in the UK market.
According to the agreement, India will gain preferential access to the UK’s green vehicle segment from the sixth year of implementation. The quota for made-in-India electric, hybrid and hydrogen-powered passenger vehicles will start at 17,600 units and gradually rise to 88,000 units annually by the 15th year, benefiting manufacturers such as Tata Motors, Mahindra & Mahindra and Maruti Suzuki.
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At the same time, India has agreed to allow imports of 3,78,000 conventional internal combustion engine (ICE) passenger vehicles from the UK at concessional customs duty over the first 15 years of the agreement.
The deal, whose implementation date was announced on June 17, provides British automakers improved access to the Indian market through a phased reduction in import duties. Tariffs on UK-built passenger vehicles will progressively decline from current levels of around 100-110% to as low as 10% under a quota-based framework.
Tiered Tariffs
In the first year, 20,000 UK-made passenger vehicles will be eligible for lower duties. This quota will increase to 37,000 units by the fifth year before gradually reducing to 15,000 units annually from the 15th year onwards.
For large petrol and diesel vehicles, customs duty will fall to 30% from 110% within a quota of 10,000 units in the first year. Medium-capacity and smaller-engine vehicles will attract a 50% duty under separate quotas of 5,000 units each. By the fifth year, tariffs across all ICE categories will decline to 10%.
Price Realignment
The expected tariff benefits have already begun influencing pricing strategies of British luxury carmakers in India. Jaguar Land Rover India recently reduced prices of the imported Range Rover SV and Range Rover Sport SV by up to ₹75 lakh, citing the upcoming duty structure under the trade agreement.
British supercar manufacturer McLaren is also expected to reduce prices across its India portfolio, while other UK-based luxury brands including Bentley, Rolls-Royce and Aston Martin are eligible for the concessions. BMW Owned MINI brand has announced price protection plans in which customers will get the refund of their price difference once the updated pricing comes into effect.
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India has, however, protected its domestic mass-market EV segment by excluding imported electric, hybrid and hydrogen-powered passenger vehicles priced below GBP 40,000 from tariff concessions. No duty relief will be offered on such imports during the first five years, with limited concessions beginning only from the sixth year under a quota-based system.
TOPICSIndia-UK TradeThis article was first uploaded on June eighteen, twenty twenty-six, at twenty-one minutes past six in the evening. © The Indian Express (P) Ltd