India Slashes Import Taxes on UK Petrol and Diesel Cars Under New 20,000-Unit Quota for 1 Year

India has notified the procedure for importers seeking Tariff Rate Quota (TRQ) benefits under the India-UK Comprehensive Economic and Trade Agreement (CETA), which will take effect on 15 July 2026, as per news reports. 

The framework outlines how eligible importers can avail concessional customs duties on passenger vehicle imports from the UK while operating within annual quota limits. 

Duty Relief Under Quota System 

Under CETA, customs duty on eligible automotive imports from the UK will gradually reduce from around 110% to 10%, subject to quota allocations. 

Over the first 15 years of the agreement, India will allow the import of 3.78 lakh conventional-engine passenger cars. By the fifth year, the annual quota will reach 37,000 units, with customs duty reduced to 10%, after which no further reduction will apply. 

Import Conditions 

Only Original Equipment Manufacturers (OEMs) and their authorised dealers or channel partners can apply for TRQ allocation. 

Applicants must submit a Certificate of Origin issued by UK authorities along with a pre-purchase agreement from the UK manufacturer.  

The DGFT will monitor quota utilisation, with certificates remaining valid for 12 months or until the end of the calendar year, whichever is earlier. Importers have also been asked to pass on the benefit of lower customs duty to consumers. 

1st-Year Quotas 

In the 1st year, India will permit imports of 20,000 passenger cars across 3 categories. 

The quota includes 10,000 large-engine vehicles, where customs duty falls from 110% to 30%, along with 5,000 mid-size vehicles and 5,000 mass-market vehicles, both attracting a reduced duty of 50% from 66%. 

EV Protection Continues 

India has kept vehicles priced below GBP 40,000 (CIF) outside the agreement, protecting the domestic mass-market EV segment led by companies such as Tata Motors, Mahindra & Mahindra and Maruti Suzuki.

No concessions have been granted for electric, hybrid or hydrogen passenger vehicles during the first five years.  

From the sixth year, vehicles priced between GBP 40,000 and GBP 80,000 will attract 50% duty with a quota of 400 units, while those priced above GBP 80,000 will face 40% duty with an import limit of 4,000 units. 

Read More: Government Extends Customs Duty Relief on Goods Used in Lithium-Ion Cell Manufacturing Until March 2029! 

Conclusion 

The notified TRQ framework sets out the import process under the India-UK CETA, balancing market access with domestic industry safeguards through phased duty reductions, quota-based imports and continued protection for India's mass-market EV segment. 

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