India Unveils Automotive Tariff Roadmap Ahead of UK–India Free Trade Agreement
- News Desk
- Jul 11
- 3 min read
The Government of India has officially announced a comprehensive roadmap outlining quota-based customs duty concessions on vehicles imported from the United Kingdom. This operational framework, notified by the Directorate General of Foreign Trade under the Ministry of Commerce and Industry, establishes the administrative procedures for the India–United Kingdom Comprehensive Economic and Trade Agreement, which enters into force on 15 July 2026.
Concluded on 6 May 2025 and signed in London on 24 July 2025, the agreement replaces standard import tariffs of approximately 110 percent with phased concessional duties that eventually fall to 10 percent under a carefully managed tariff-rate quota mechanism. The notification provides clear eligibility criteria and implementation timelines for passenger and commercial vehicles, offering greater certainty to manufacturers and importers in both countries.
Phased Tariff Reductions for Passenger Vehicles
Under the agreement, India will allow the import of up to 3.78 lakh conventional passenger vehicles from the United Kingdom at concessional customs duties over a 15-year period.
During the first year, imports will be limited to 20,000 vehicles, divided across three engine-capacity categories:
Premium vehicles (petrol above 3,000 cc and diesel above 2,500 cc): 10,000 units, with tariffs reduced from 110% to 30%.
Mid-sized vehicles (petrol 1,500–3,000 cc and diesel up to 2,500 cc): 5,000 units, with tariffs reduced from 66% to 50%.
Small passenger vehicles (up to 1,500 cc): 5,000 units, with tariffs reduced from 66% to 50%.
Long-Term Quota Expansion
The quota will gradually increase, reaching 37,000 vehicles by the fifth year, when the concessional customs duty across all conventional passenger vehicle categories will reduce to 10 percent. From the sixth year onwards, annual quotas will gradually decrease before stabilising at 15,000 vehicles from the fifteenth year onwards, while the 10 percent tariff continues. The agreement also introduces tariff-rate quotas for goods vehicles, beginning with 2,500 units in the first year and increasing to 3,500 units annually from the fifth year.
Protecting India's Electric Vehicle Industry
The agreement adopts a cautious approach towards alternative-fuel vehicles. Electric, hybrid, and hydrogen-powered passenger vehicles will not receive tariff concessions during the first five years, allowing India's domestic electric vehicle industry additional time to strengthen manufacturing capacity and competitiveness. Furthermore, only alternative-fuel vehicles with a Cost, Insurance and Freight (CIF) value above £40,000 will qualify for future tariff concessions, protecting the domestic mass-market segment.
Gradual Opening for Premium Electric Vehicles
Tariff concessions for premium alternative-fuel vehicles will begin in the sixth year of the agreement.
Vehicles valued between £40,000 and £80,000 will initially benefit from a quota of 400 units, increasing to 2,000 units by the fifteenth year, while tariffs gradually reduce from 50 percent to 10 percent. Ultra-luxury alternative-fuel vehicles priced above £80,000 will begin with an annual quota of 4,000 units, rising to 20,000 units by the fifteenth year. Tariffs will fall from 40 percent to 10 percent over the same period.
Clear Rules for Importers
To ensure transparency and prevent misuse, tariff-rate quota benefits will be available only to UK Original Equipment Manufacturers (OEMs) and their authorised dealers or channel partners.
Importers must submit:
A pre-purchase agreement from a UK manufacturer.
A valid Certificate of Origin issued by the designated UK authority.
Documentation complying with the Customs Tariff Rules, 2026, ensuring products genuinely originate from the United Kingdom.
Quota certificates will remain valid for 12 months or until the end of the calendar year, whichever comes first.
The announcement comes just days before the UK India Leaders Conference 2026, organised by the Europe India Centre for Business and Industry (EICBI) on 13 July 2026 at the UK Parliament, London.
Held under the theme "From Agreement to Action: Unlocking the UK–India FTA," the conference will bring together parliamentarians, policymakers, legal experts, and business leaders to discuss how the agreement can translate into tangible trade and investment opportunities.
Speakers include Mr. Sujit S. Nair, Chairman of EICBI, members of the House of Lords including Lord Rami Ranger, Lord Kuldip Sahota, and Baroness Pola Uddin, as well as UK Members of Parliament Navendu Mishra and Sonia Kumar. The discussions will focus on trade, investment, innovation, digital transformation, and resilient supply chains, providing timely insights as the UK–India Free Trade
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