UK-India trade deal: Know how it will benefit luxury car buyers
The agreement outlines a clear volume cap for each year to ensure that the concessional tariffs only apply to a fixed number of units. In the first year alone, a total of 20,000 ICE cars from the UK will be allowed into India at the discounted rates, comprising 10,000 high-end models, and 5,000 each in the mid and entry-level segments. This number will gradually increase, peaking at 37,000 in year five, before slowly tapering to 15,000 units annually from the 15th year onward. Any imports beyond these volumes will still attract reduced out-of-quota tariffs compared to the current base rates, though the benefits will be less pronounced.
For instance, out-of-quota duties on large-engine vehicles will reduce from 95% in year one to 50% by year ten. For mid- and low-engine variants, the rate will stabilise at around 55% and 45% respectively by the tenth year.Reduction on EVsElectric vehicles (EVs), hybrids, and hydrogen fuel-cell passenger cars are also included in the FTA under a separate TRQ structure, but with conditions. Only vehicles with a CIF (Cost, Insurance, and Freight) value above 40,000 will receive preferential treatment. EVs priced below 40,000 are excluded entirely from any customs duty relief. For cars priced between 40,000 and 80,000, the duty will fall from the base 110% to 50% in the sixth year of implementation, and further to 10% by year ten. High-end electric vehicles priced above 80,000 will benefit even more, with the duty reduced to 40% in year six and then to 10% by year ten.
Starting from the sixth year, 4,400 electric and hybrid vehicles will be allowed annually at these reduced rates. The quota expands over time, reaching 13,200 units by year ten and stabilising at 22,000 units annually from year fifteen. Importantly, there is no preferential duty on EVs imported beyond this quota—meaning high duties will apply to surplus shipments. The Indian government has also made it clear that zero-emission commercial vehicles such as electric two-wheelers, buses, and trucks will not be eligible for any duty concessions under this agreement.advertisementReduction on commercial vehicles
In the commercial vehicle category, fully built UK-made trucks—specifically internal combustion engine models falling under HS code 8704—will benefit from reduced customs duties over a ten-year period. These trucks currently face a base duty of 44%. For in-quota imports, the duty will begin at 37% in the first year and progressively fall to 8.8% by the fifth year. A total of 2,500 trucks will be allowed at reduced rates in the first year, with the quota increasing gradually to 3,500 units annually from year five onward. Out-of-quota duties for trucks will also drop incrementally from 41.8% in year one to 22% by year ten.However, certain limitations remain in place to protect India's domestic industry. Vehicles excluded from the FTA include zero-emission two-wheelers and commercial vehicles, which will continue to attract full customs duties. Moreover, the FTA clearly specifies that no out-of-quota relief will be available for electric or hybrid vehicles—duty reductions will strictly apply only within the defined TRQs.This strategic partnership between India and the UK marks a turning point in trade relations and is poised to reshape India's luxury car market. For Indian buyers, it means lower entry barriers to owning iconic British automotive brands. For UK carmakers, the agreement opens access to one of the world's fastest-growing premium vehicle markets. The phased approach to tariff reduction ensures that Indian manufacturers have time to adapt, while consumers gain greater variety, better pricing, and access to cutting-edge global models. The first round of benefits will begin immediately upon the agreement's enforcement, with the entire framework unfolding over a 15-year roadmap.Subscribe to Auto Today Magazine- EndsTune InMust Watch
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