India-UK trade deal: Centre unveils import process for UK cars
What's the story
India has unveiled the procedure for importers to seek government approval and avail quota-based concessional import duties on passenger cars and goods vehicles from the UK. This is part of the India-UK Comprehensive Economic and Trade Agreement (CETA), which will come into effect from July 15. The Directorate General of Foreign Trade (DGFT) announced this in a public notice dated July 9.
Import guidelines
Applicants must submit certificate of origin from UK authorities
The DGFT has notified the procedure for allocation of Tariff Rate Quotas (TRQ) under the India-UK CETA. It mandates importers to present a Certificate of Origin issued by relevant UK authorities while clearing imported consignments. Only Original Equipment Manufacturers (OEMs) and dealers/channel partners authorized by these UK-based OEMs are eligible to apply for the TRQ, as per the DGFT's notice.
Application process
Monitoring of cumulative quantities
To qualify for the quota, applicants must also submit a pre-purchase agreement from a UK-based OEM. This document should mention the number of vehicles to be supplied during the TRQ year. The DGFT's notice further states that it will monitor cumulative quantities for TRQ Certificates issued and no such certificates shall be issued once the stated TRQ quantity limit is reached.
Certificate details
Certificates valid for maximum of 12 months
The DGFT has also clarified that these certificates will be valid for a maximum of 12 months or until the end of the calendar year, whichever is earlier. Importers under TRQ are expected to pass on the benefit of the concessional customs duty available under it to final buyers or consumers. This move is aimed at making UK-made vehicles more affordable in India by reducing import duties significantly.
Duty reduction
Select automotive imports to see phased reduction in import duties
Under the India-UK trade deal, select automotive imports from the UK will see a phased reduction in import duties. The duty will be slashed from around 110% to 10%, subject to quota limits on both sides. In the first year, India will allow the import of 20,000 passenger cars across different engine categories.
Vehicle categories
Duty on larger-engine vehicles to be reduced to 30%
The customs duty on larger-engine vehicles will be reduced to 30% from 110%. Meanwhile, mid-sized and mass-market petrol and diesel cars will see a duty reduction to 50% from 66%. However, India has not opened its market for vehicles priced below £40,000 (CIF), safeguarding the domestic mass-market electric vehicle segment.