India will allow the import of 3.78 lakh vehicles during the first 15 years.
The India-UK free trade agreement (FTA), which was signed last year, will come into effect from July 15. The announcement was made following a meeting between Prime Minister Narendra Modi and British PM Keir Starmer on the sidelines of the G7 Summit in Evian, France.
“This agreement will significantly boost our bilateral trade and investment,” PM Modi said. “Both PM Starmer and I, who are in Evian for the G7 Summit, are naturally very happy with the significant momentum being added to our economic ties,” he added.
Under the new FTA, India will allow the import of 3.78 lakh conventional engine passenger vehicles from the United Kingdom at concessional customs duties during the first 15 years.
Import duty will be reduced from 110% to 10% under a quota-based mechanism. India will allow the import of 20,000 passenger cars in the first year.
The quota for vehicles with engine sizes above 3,000cc (petrol) and 2,500cc (diesel) has been capped at 10,000 units for the first year at 30% customs duty.
Vehicles with engine sizes between 1,500cc and 3,000cc, as well as mass-market models with engines up to 1,500cc, will attract 50% duty, with import volume for the first year restricted to 5,000 units each.
The annual quota will increase to 37,000 units by the fifth year, after which the import duty across all categories will be reduced to 10%. From the 15th year onwards, annual imports will be capped at 15,000 units at 10% duty.
EVs, hybrid, and hydrogen-powered vehicles priced below GBP 40,000 have been excluded from the agreement. However, from the 6th year, vehicles priced between GBP 40,000 and GBP 80,000 will attract a duty of 50% under a quota of 400 units. Import of vehicles priced above GBP 80,000 will be capped at 4,000 units at 40% import duty. Duties for both categories will be reduced to 10% after the 10th year.
Source: ET Auto