India Notifies Import Rules For UK Cars Under Trade Pact, Allows Lower Duties Via Quota System

India has notified the framework for importing passenger cars and goods vehicles from the UK at concessional customs duties under the India-UK Comprehensive Economic Trade Agreement (CETA), which will come into effect from July 15.

The Directorate General of Foreign Trade (DGFT) has issued procedures for importers seeking tariff rate quota (TRQ) benefits under the agreement.

The system will allow eligible UK-origin vehicles to enter India at reduced customs duties within specified annual limits.

Under the trade pact, India will gradually reduce import duties on select automobile imports from the UK from around 110% to 10% over a phased period, subject to quota restrictions.

India will permit imports of up to 3.78 lakh conventional-engine passenger cars from the UK at concessional duty rates during the first 15 years of the agreement.

According to the DGFT notification, only original equipment manufacturers (OEMs) and dealers or channel partners authorised by vehicle manufacturers in the UK will be eligible to apply for TRQ allocations.

Applicants will also need to submit a Certificate of Origin issued by UK authorities along with a pre-purchase agreement from a UK-based OEM mentioning the number of vehicles proposed to be supplied during the TRQ period.

The DGFT said TRQ certificates will be issued based on available quota limits and no additional certificates will be granted once the allocated quantity is exhausted.

The certificates will remain valid for up to 12 months or until the end of the relevant calendar year, whichever is earlier.

Importers benefiting from the quota have also been advised to pass on the advantage of lower customs duties to customers.

The annual quota for conventional-engine passenger vehicles will increase gradually, reaching 37,000 units by the fifth year of the agreement. In the first year, India will allow imports of 20,000 passenger cars across various engine categories.

For larger-engine vehicles, customs duties will fall to 30% from 110%, while duties on mid-sized and mass-market petrol and diesel cars will reduce to 50% from 66%.

However, India has retained safeguards for domestic manufacturers by keeping vehicles priced below GBP 40,000 (CIF value) outside the duty concession framework.

The agreement also excludes electric, hybrid and hydrogen-powered passenger vehicles from duty benefits during the first five years. From the sixth year onwards, concessional duties will be available for higher-priced vehicles under specified quotas.

The move marks a major step in implementing the India-UK trade agreement while balancing greater market access with protection for India’s automotive industry.