India protects mass-market ICE, EVs; offers selective auto access to UK under CETA

“The duty reduction to 10% over five years is only in-quota. Out of quota, the duty reduction is 50% over ten years. There are no concessions given to electric, hybrid, and hydrogen-powered vehicles in the first five years.”

As per the agreement, the number of ICE vehicles receiving concessions will be reduced by the number of EV vehicles receiving concessions from the sixth year onwards, to maintain a total quota volume of 37,000 units at the end of 15 years of duty concessions.

Pratik Shah, Partner, EY-Parthenon, says the India-UK Free Trade Agreement is a “strategic milestone” for the automotive sector reducing import tariffs on UK vehicles from over 100% to 10% within quota limits, while ensuring 99% duty-free access for Indian exports. “With a growing base of auto component & vehicle exports from India, the agreement sets the stage for stronger bilateral trade, deeper supply chain integration, increase jobs and investment flows. While there are few concerns around backdoor Chinese imports & Uks CBAM levies, long-term success hinges on balancing collaboration with protecting local innovation.”

India and the United Kingdom signed a historic economic partnership agreement today, which aims to double the bilateral trade between the two countries from USD 56 billion currently. CETA secures unprecedented duty-free access for 99% of India’s exports to the UK, covering nearly the entire trade basket. This is expected to open new opportunities for labour-intensive industries such as textiles, marine products, leather, footwear, sports goods, toys, and gems and jewellery, alongside fast-growing sectors like engineering goods, auto components, and organic chemicals.