CETA has kept India’s low-cost electric cars out of the subsidy framework. Additionally, it has completely excluded electric and hydrogen-powered two-wheelers, buses and trucks from the preferential tariff regime.

For conventional internal combustion engine (ICE) passenger cars imported from the UK, India has agreed to allow a cumulative 378,000 vehicles at concessional duty rates over a period of 15 years. The annual quota starts at 20,000 units in the first year, increases to a peak of 37,000 units in the fifth year and then gradually decreases to 15,000 units in the fifteenth year, where it remains thereafter.

The agreement divides passenger cars eligible for the concession into three categories based on engine size. The first includes cars with petrol engines larger than 3,000 cc or diesel engines larger than 2,500 cc, usually premium and luxury models. The second includes petrol cars between 1,500 cc to 3,000 cc and diesel vehicles between 1,500 cc to 2,500 cc. The third includes cars with engines up to 1,500 cc.

Jaguar Land Rover (JLR) said all of its UK-made completely built (CBU) vehicles are eligible for the reduced duty framework, including the Range Rover SV, Range Rover Sport SV, bespoke variants and limited-edition models.

The category with the largest engines receives the steepest initial tariff reduction. These cars will attract 30 percent import duty in the first year under the quota of 10,000 units, while the current base duty is 110 percent. The other two categories of cars will each get a quota of 5,000 units in the first year, with duty reduced to 50 per cent from the base rate of 66 per cent.

Till the fifth year, there will be a 10 per cent in-quota fee on all three categories. Importing in excess of the annual quota will lose access to lower in-quota tariff rates and instead incur higher quota charges, which remain above the concessional rates but gradually reduce over time.

JLR has already reduced prices on some imported models. The company has recently reduced the price of Range Rover SV from ₹4.25 crore to ₹3.5 crore and Range Rover Sport SV from ₹2.75 crore to ₹2.35 crore.

The agreement is expected to mainly benefit luxury makers like JLR, whose UK-made flagship models come under the concessional framework. However, the company said that the fee cut will not change its localization plans in India.

“Our local manufacturing commitment remains unchanged,” said Rajan Amba, managing director of JLR India.

JLR also expects demand to increase due to reduction in import duty. “We expect demand to increase as a result of lower import duties,” Amba said.

The agreement takes a more cautious approach towards electric, hybrid and hydrogen-powered passenger vehicles classified as “green vehicles”. India will not provide any tariff concession on these vehicles during the first five years after the implementation of the agreement.

From the sixth year, concessions become available only to green vehicles with a cost, insurance and freight (CIF) value of more than £40,000. CIF includes the cost of vehicle, insurance and shipping. Vehicles priced below that limit will not get any preferential treatment.

Green vehicles priced between £40,000 and £80,000 will be eligible for a quota of 400 units in the sixth year at a 50 per cent duty rate. From the fifteenth year the quota would gradually increase to 2,000 units annually, while the duty would reduce to 10 percent by the tenth year.

For green vehicles priced above £80,000, the sixth year quota will be 4,000 units at a 40 per cent duty rate. This quota increases to 20,000 units annually from the fifteenth year onwards, with duty also reduced to 10 per cent by the tenth year.

The agreement also creates a separate tariff regime for conventional trucks imported from the UK. The quota starts at 2,500 units in the first year, with an in-quota fee of 37 per cent compared to the current 44 per cent fee. By the fifth year, the duty drops to 8.8 percent while the quota increases to 3,500 units.

Also, electric and hydrogen-powered two-wheelers, buses and trucks have been kept out of the preferential tariff schedule, allowing India to retain existing import duties on these categories.

In terms of exports, India’s advantage is concentrated in green vehicles rather than traditional petrol and diesel models. The automotive schedule provides duty-free access for Indian green vehicles to the UK market, but does not create a comparable preferential quota arrangement for conventional passenger vehicles similar to what India offers to British ICE vehicles.

From the sixth year onwards, there will be zero duty on Indian green vehicles imported into the UK within the specified quota. Unlike India’s concessional framework, which is limited to green vehicles priced above £40,000, the UK’s preferential regime covers low-price, mid-price and premium green vehicles up to £80,000. The annual quota starts at 17,600 green vehicles in the sixth year and increases continuously to 88,000 green vehicles from the fifteenth year onwards.

This arrangement means that India has largely protected its low-cost green vehicle market from British competition, while opening up access to predominantly premium and luxury green vehicles.