Under the India-United Kingdom Free Trade Agreement (FTA), the reduced import tariffs of 10% on the auto sector will include different bands for cars within the quota system, as stated by a senior government official in India.
According to a report by the Hindu, the quota will be categorized differently for internal combustion engines (ICE) and electric vehicles (EVs). For ICE vehicles, the classification within the quota will be based on engine capacity, while for EVs, it will be determined by the vehicle’s price.
The agreement also incorporates the exchange of electronic certificates of origin to facilitate Indian exports and introduces the Double Contribution Convention (DCC), which is expected to save temporary workers in the UK and their employers around ₹4,00
Additionally, import duties on automobiles will be gradually reduced over a period of 10-15 years, with exceptions for futuristic and low-cost cars. These provisions aim to enhance business efficiency for Indian exporters.
After more than three years of intense negotiations, the India-UK Free Trade Agreement was officially signed last week. Under the agreement, nearly 99% of goods manufactured and exported from India to the UK, including automobiles, will be exempt from import duties.
Meanwhile, the import duty on fully assembled cars from the UK has been reduced from 110% to 10%. However, uncertainties remain regarding which vehicles will qualify for the benefit under the Free Trade Agreement (FTA).
Mercedes-Benz and BMW have welcomed the India-UK Free Trade Agreement (FTA) as a positive step but stated that it is unlikely to significantly affect the prices of luxury cars in the country.
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