UK trade deal slashes India’s import duty on luxury cars, but liberalisation in EVs to take time | India News

NEW DELHI: India finally relaxed its highly-controlled duty rates on imported cars with the UK trade deal paving the way for customs charges to come down from the highs of 100%+ to as low as 10%, benefitting ultra-luxury car brands such as Jaguar and Land Rover, Rolls-Royce, Bentley and Aston Martin.However, the government has delayed the import duty concessions when it comes to electrics and other green cars, the measure being initiated to protect the domestic players who are looking to produce high-value clean cars. “There are no concessions given to electrics, hybrids, and hydrogen-powered vehicles in the first five years,” an official said.In petrol and diesel categories, the lower tariffs can be enjoyed for a limited number of vehicles as the government has imposed quotas and limits to protect the domestic makers and also curb mass-scale shipments.For large-engine petrol cars above 3000 cc and diesel cars over 2500 cc — traditionally luxury imports — India has committed to lowering the current 100%+ customs duty to 10% over 15 years, within a quota starting at 10,000 units and rising to 19,000 in year five, according to a review document of Global Trade Research Initiative (GTRI).For mid-sized cars (1500–2500 cc diesel / up to 3000 cc petrol), a 50% in-quota duty applies initially, falling to 10% by year five. 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% to 50%, depending on vehicle size and year,” GTRI said.In electrics, market access has been given mostly in the high price segment of vehicles priced above £80,000 (around Rs 94 lakh). “For vehicles priced below £40,000, no market access provided, ensuring complete protection for the mass-market EV segment in which India seeks global leadership,” the official said.While the duty cuts will happen only once the UK Parliament approves the agreement (possibly by the middle of next year), analysts believe that the duty reduction with the UK may pave the way for similar measures with other countries and trading blocs as well. “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 U.S.,” GTRI said.“By year five, up to 37,000 UK-built ICE vehicles could enter India annually at just 10% duty — far below the current base rate of 110%. This creates a preferential entry path for high-end British brands… 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.”