FTA promise: UK cars get a tax cut in India

Published 18 June 2026 · europe

India will allow import of up to 3.78 lakh units of conventional-engine passenger cars, including mass-market models, from the UK at concessional import duty during

India will allow import of up to 3.78 lakh units of conventional-engine passenger cars, including mass-market models, from the UK at concessional import duty during the first 15 years of the implementation of the bilateral trade pact, which will come into force from July 15. Under the comprehensive economic and trade agreement (CETA), import duties on automotive products will fall from about 110 per cent to 10 per cent, with quotas on both sides.Also read: India-UK free trade deal to take effect on July 15, opening 99% of exports to tariff-free access According to the India-UK CETA document, released on Wednesday, India will get access to the UK's electric, hybrid/hydrogen passenger cars segment with duty-free exports to that country from the sixth year in the price segment ranging from GBP 20,000 to GBP 80,000, with the total quota reaching a peak of 88,000 units from the 15th year and continuing in the subsequent years. This will benefit Indian manufacturers such as Tata Motors Passenger Vehicles, Mahindra & Mahindra, and Maruti Suzuki, among others.

The two countries announced the implementation of CETA from July 15. For imports from the UK to India, the quota for conventional-engine passenger cars will peak in the fifth year across specified categories of vehicles at 37,000 units, with customs duties reduction reaching a final 10 per cent. The duties will not be reduced beyond this. In the first year, the quota for passenger cars of engine size more than 3,000 cc (petrol) and over 2,500 cc (diesel) is 10,000 units, with customs duty being reduced to 30 per cent from 110 per cent. For cars with engine size of 1,500 cc (petrol), 2500 cc (diesel) and 3,000 cc (petrol), the quota is 5,000 units, with duty being reduced to 50 per cent from 66 per cent. In the mass market segment of engine size of up to 1,500 cc, the allowed quota of import in the first year of the pact is 5,000 units, with customs duty being reduced to 50 per cent from 66 per cent, as per the document.

A total of 20,000 units of passenger cars across the three categories will be allowed to be imported in the first year under the agreement. In the fifth year, the import quota for passenger cars of engine size more than 3,000 cc (petrol) and over 2,500 cc (diesel) is 19,000 units, while for cars with engine size of 1,500 cc (petrol), 2,500 cc (diesel) and 3,000 cc (petrol), the import quota is capped at 9,000 units, and a similar quota is fixed for cars with engine size of up to 1,500 cc at 10 per cent concessional duty. From the 15th year, the total quota will remain constant at 15,000 units annually with duties fixed at 10 per cent across the three categories.Also read: India-UK FTA levels the playing field for apparel exporters, says Pearl Global's Pallab Banerjee India has not opened its market for vehicles priced below GBP 40,000 (CIF), ensuring complete protection for the mass-market EV segment in which India seeks global leadership through its homegrown firms like Tata Motors and Mahindra & Mahindra, besides Maruti Suzuki.