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 UK
- Benefit will be in effect from the 6th year onwards
- Maruti Suzuki, Toyota, Tata, Mahindra could benefit
India-UK FTA: Customs duty on made-in-India EVs, hybrids explained
As per this agreement, made-in-India electric vehicles (EVs), hybrids, and vehicles powered by hydrogen will be eligible to be imported in the United Kingdom free of customs duty from January 1 of year six.
From the sixth year, 17,600 vehicles will be eligible for this benefit, and this quota will steadily increase to 88,000 vehicles in the fifteenth year. However it must be mentioned that this customs waiver will not be extended to made-in-India vehicles costing above GBP 80,000, in the fifteen year horizon. As per the agreement, passenger vehicles are bifurcated into four categories based on their Cost, Insurance, Freight (CIF) – under GBP 20,000, GBP 20,000-40,000, GBP 40,000-80,000, and above GBP 80,000.
| Customs duty on made-in-India EVs, hybrids, hydrogen cars | |||||
|---|---|---|---|---|---|
| Year | Under GBP 20,000 CIF | GBP 20,000-40,000 CIF | GBP 40,000-80,000 CF | Above 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 and 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 in the future.
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 export their electric vehicles as of now, this agreement could certainly help these homegrown companies to penetrate into the UK; a market where Tata Motors products used to be on sale.
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