New Delhi, India – In a significant development for the automotive sector, India's government has formally notified a reduction in customs duties for passenger cars and goods vehicles imported from the United Kingdom. This change, effective from July 15, 2026, precedes the official rollout of the comprehensive India-UK Free Trade Agreement (FTA), also referred to as the Comprehensive Economic and Trade Agreement (CETA).
Phased Duty Reduction and Quotas
Under the terms of the India-UK FTA, India has committed to a phased reduction of import duties on certain categories of automobiles. The current import duty of 110% will be gradually lowered to 10% over a period ranging from 10 to 15 years, subject to specific quotas.
The Directorate General of Foreign Trade (DGFT) has outlined the procedure for importers to apply for these quota-based duty concessions. The concessions will apply to:
- 378,000 units of internal combustion engine (ICE) passenger cars over the first 15 years.
- 137,000 units of electric, hydrogen, and hybrid passenger cars over the first 15 years.
- 32,500 commercial goods vehicles over a 10-year period.
These new, more favorable rates will come into effect on July 15, 2026, marking a new chapter in trade relations between the two nations.
Application Process and Consumer Benefit
To avail of the concessional duty rates, importers in India must present a Certificate of Origin issued by the relevant authorities in the UK at the time of customs clearance. The DGFT will periodically announce application windows for submitting Tariff Rate Quota (TRQ) applications for each calendar year, with the year defined as January 1 to December 31.
“Importers under TRQ shall endeavour to pass on the benefit of the concessional customs duty available under the TRQ to the final buyer or consumer,” stated the DGFT notification, emphasizing the intent for consumers to ultimately benefit from these trade facilitations.
This move is expected to open new avenues for UK car manufacturers in the Indian market and potentially offer Indian consumers a wider range of vehicles at more competitive prices.