• Source:JND

India-UK CETA Car Import Duty 110 To 30 Percent:  The India-UK Free Trade Agreement (FTA) is set to come into force tomorrow. While the India-UK FTA will benefit sectors such as textiles, footwear, garments, processed foods, and more, it will also reshape the outlook for imported luxury cars in the Indian automotive market.

The Comprehensive Economic and Trade Agreement (CETA) was signed between India and the UK on July 25, 2025, and one of its key highlights is the phased reduction in import duties on British-made vehicles. The India-UK FTA is anticipated to cut the prices of British-made luxury cars by up to Rs 3 crore. Let’s take a look at the key highlights of the India-UK FTA on the automotive sector, along with the brands that are set to receive a price cut.

India-UK FTA: Car Brands & Price Cut

Popular car brands such as Jaguar Land Rover, Rolls-Royce, Bentley, Aston Martin, and McLaren will be the ones to benefit most from the India-UK FTA. Notably, Jaguar Land Rover announced a price reduction of up to Rs 75 lakh earlier this year on its popular UK-made models, such as the Range Rover SV and Range Rover Sport SV. While McLaren has not yet officially announced any price reductions, its car lineup is expected to receive a price cut of more than Rs 3 crore. The official announcement of price reductions from Rolls-Royce, Aston Martin, and Bentley is also awaited.

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India-UK FTA: Duty Cut Explained

  • The import duties will be reduced under a quota-based system and in a staged manner, depending on the engine size and fuel type
  • In the phased duty cut, import duties will fall to 80 per cent from a current 110 per cent on petrol cars above 3,000cc and diesel cars above 2,500cc, in the first year
  • Notably, both of these categories have been capped at 10,000 units annually
  • Currently, petrol vehicles between 1,500cc and 3,000cc, along with diesel engines up to 2,500cc, attract duties of up to 66 per cent. After the FTA, they will attract a reduced tariff of 50 per cent, capped at 5,000 units annually
  • Moreover, petrol vehicles with engines of up to 1,500cc will also attract a reduced tariff of 50 per cent, with a quota of 5,000 units annually

The agreement between both countries also highlights a clear five-year timeline for duty reduction. By the fifth year, the quota will increase to 37,000 units annually, and all Internal Combustion Engines (ICE) will attract a reduced tariff of 10 per cent. It is worth noting that vehicles imported beyond the mentioned quota will keep on attracting higher duties.

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India-UK FTA: EVs & Hybrids To Wait

While phased duty cuts on petrol and diesel vehicles will begin immediately, battery electric vehicles, hybrid vehicles, and hydrogen-powered vehicles will have to wait till the sixth year of the implementation of the India-UK FTA to attract benefits. The FTA does not extend any immediate duty cuts to EVs, hybrid vehicles, and hydrogen-powered vehicles, which will remain outside the concessional structure for the first five years. However, select alternative fuel vehicles with a price of more than GBP 40,000 (approximately Rs 51.49 lakh) will become eligible for duty reduction based on quota.


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