Automobile companies are preparing to announce revised prices following the implementation of the trade agreement. Before the rollout, the government has issued detailed guidelines explaining the procedure for availing benefits under the quota-based reduced customs duty system.
The Directorate General of Foreign Trade (DGFT) has released a notification outlining the application process for importers seeking benefits under the Tariff Rate Quota (TRQ) system introduced under the India-UK Comprehensive Economic and Trade Agreement (CETA). The process will apply to passenger vehicles and goods vehicles imported from the United Kingdom.
According to the DGFT notification, importers intending to use the reduced customs duty benefit under the India-UK trade agreement must first obtain government approval. Only after receiving approval will they be allowed to import UK-manufactured vehicles within the specified quota at lower customs duty rates.
As per the guidelines, only Original Equipment Manufacturers (OEMs), their authorised dealers, or authorised channel partners will be eligible to apply for the quota. Applicants must submit a pre-purchase agreement issued by the UK-based vehicle manufacturer. Additionally, a Certificate of Origin issued by UK authorities will be mandatory at the time of vehicle import.
After the implementation of the India-UK FTA, customs duty on Completely Built Unit (CBU) luxury cars manufactured in the UK will reduce from 110 percent to 30 percent. However, during the first year, the benefit will be available only for a fixed quota of 20,000 imported vehicles.
The biggest beneficiaries of this agreement are expected to be British luxury automobile brands including Rolls-Royce, Aston Martin, McLaren, and Jaguar Land Rover, which is owned by Tata Motors. The prices of their fully imported vehicles are expected to witness a significant decline. The reduction in prices is likely to accelerate growth in India's high-end luxury car market, with sales potentially doubling in the coming period.
Automobile industry experts have stated that the reduction in customs duty could lead to a 20 to 25 percent decline in ex-showroom prices of luxury imported vehicles. Due to the high price range of these vehicles, customers could benefit from savings ranging between ₹1 crore and ₹3 crore.
Sales of brands such as Rolls-Royce and Aston Martin remain limited in India at present. However, the implementation of the agreement is expected to bring a major change in the pricing of fully imported vehicles. Companies have not yet officially announced their revised prices, but they have indicated that enquiries for luxury vehicles are increasing and the segment is expected to witness strong growth.
Jaguar Land Rover has already reduced prices of its imported Range Rover Sport SV and Range Rover SV models. The company expects the share of imported vehicles in its total Indian sales, currently estimated at around 3 to 4 percent, to increase to 7 to 10 percent in the near future. This indicates that sales of imported Land Rover vehicles could potentially double.
Most automobile manufacturers are yet to announce their new prices, leading many prospective luxury and imported car buyers to wait until July 15. Following the implementation of the agreement, companies are expected to reveal official pricing adjustments, allowing customers to purchase premium vehicles at reduced prices. The agreement is expected to create significant momentum in India's luxury automobile market.
The DGFT notification states that tariff reductions and import quotas for vehicles will depend on engine capacity and fuel type. Vehicles with petrol engines above 3.0 litres and diesel engines above 2.5 litres will attract a 30 percent tariff, with a quota limit of 10,000 units during the first year.
Petrol vehicles with engine capacities between 1.5 litres and 3.0 litres, along with diesel vehicles below 2.5 litres, will attract a 50 percent tariff during the first year, with a quota of 5,000 units. Similarly, vehicles with engine capacities up to 1.5 litres will also receive a 50 percent tariff rate with a first-year quota of 5,000 units.
Therefore, a total of 20,000 imported vehicles will receive the reduced tariff benefit during the first year. The tariff rates and quota limits will be revised in subsequent years under the agreement, shaping the future pricing and availability of imported luxury vehicles in India.
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