We’ve already discussed how the India-UK Free Trade Agreement (FTA) will potentially benefit buyers of imported (CBU) cars in India. On the other hand, made-in-India models will also benefit from this trade agreement.
- No duty on India-made EVs, hybrids imported in the UK
- Benefits will come into effect from the sixth year onwards
- Maruti Suzuki, Toyota, Tata Motors and Mahindra could gain
India-UK FTA: Customs duty on made-in-India EVs, hybrids explained
As per this agreement, made-in-India electric vehicles (EVs), hybrids and hydrogen-powered vehicles will be eligible for import into the United Kingdom free of customs duty from January 1 of the sixth year. Currently, the customs duty is 10 percent.
From the sixth year, 17,600 vehicles will be eligible for this benefit, and this quota will steadily increase to 88,000 units by the fifteenth year. However, this customs waiver will not apply to made-in-India vehicles costing above GBP 80,000 in the 15-year horizon. As per the agreement, passenger vehicles are bifurcated into four categories based on their cost, insurance and freight (CIF): under GBP 20,000, GBP 20,000-40,000, GBP 40,000-80,000 and above GBP 80,000.
| UK’s quota for Indian EVs, hybrids and hydrogen cars at zero customs duty | |||||
|---|---|---|---|---|---|
| Year | Under GBP 20,000 CIF | GBP 20,000-40,000 CIF | GBP 40,000-80,000 CIF | Above GBP 80,000 CIF | Total quota |
| 6 | 6,800 | 6,800 | 4,000 | - | 17,600 |
| 7 | 10,200 | 10,200 | 6,000 | - | 26,400 |
| 8 | 13,600 | 13,600 | 8,000 | - | 35,200 |
| 9 | 17,000 | 17,000 | 10,000 | - | 44,000 |
| 10 | 20,400 | 20,400 | 12,000 | - | 52,800 |
| 11 | 23,800 | 23,800 | 14,000 | - | 61,600 |
| 12 | 26,350 | 26,350 | 15,500 | - | 68,200 |
| 13 | 28,900 | 28,900 | 17,000 | - | 74,800 |
| 14 | 31,450 | 31,450 | 18,500 | - | 81,400 |
| 15 and onwards | 34,000 | 34,000 | 20,000 | - | 88,000 |
Carmakers with potential to benefit from customs duty cut
Currently, the only vehicle eligible is the Maruti Suzuki e Vitara, for which India is the mother plant for all global markets, including the UK. Further, the company is also developing smaller series hybrid vehicles that could be exported to the UK.
Other manufacturers that could potentially benefit from this agreement in the years to come include Toyota, Mahindra and Tata Motors. While neither Mahindra nor Tata Motors currently exports EVs to the UK, this pact could certainly help these homegrown companies gain a foothold in the UK, a market where Tata Motors once sold its products.
Hormazd Sorabjee
Anurag Chaturvedi
