India has capped the duty-free import quota for electric vehicles under the free trade agreement with the UK to a few thousand units only and sensitivity of the sector has been taken care of, an official said on Tuesday.India and the UK on Tuesday sealed a landmark free trade agreement that will lower tariffs on 99% of Indian exports and would make it easier for British firms to export whisky, cars and other products to India, besides boosting the overall trade basket. The aim is to double the two-way commerce by 2030.
Tariffs on automotive imports will go from over 100% to 10% under quotas on both sides, benefiting companies such as Tata-JLR. The official also said that the duty-free access to imports of internal combustion engine vehicles from the UK is also limited to a pre-defined quota.
“The duty-free quota on EVs is limited only to a few thousand. No out-of-quota duty reduction for EVs. The sensitivity related to EVs has been taken care of,” the official, who did not wish to be named, said.Also Read: India-UK seal historic FTA and double contribution convention; PM Modi, Keir Starmer reactFurther, the out-of-quota duty on internal combustion engine vehicles will be reduced gradually over a longer period of time, thereby helping Indian industries to absorb the incremental increase of imports from the UK.”As the fourth-largest automobile producer globally, India possesses the scale and strategic depth to emerge as a global leader in the automotive value chain,” the official said.Despite India’s strong manufacturing base, its share in the globally traded auto market remains subdued, highlighting a vast scope for expansion. The duty-free access to the UK market for internal combustion engine vehicles has the potential to boost India’s auto and auto components exports.The total electric passenger vehicle retail sales in India grew by 56.87 per cent in April this year to 12,233 units compared to 7,798 units in the same month last year, according to the latest data released by the Federation of Automotive Dealers Associations (FADA).Also Read: India-UK FTA Impact: Sectors poised for growth and companies to watchTata Motors continued to lead the market with 4,436 units of electric PVs sold last month, although JSW MG Motor India and Mahindra & Mahindra (M&M) are catching up with 3,462 units and 2,979 units, respectively, as per FADA data collated as on May 2 this year.The official also said sensitive industrial goods like plastics, diamond, silver, base stations, smartphones, television camera tubes, optical fibres, optical fibre bundles and cables are under the exclusion list of the agreement and no duty benefits would be provided on these under the FTA.In alcoholic beverages, the official said, Scotch Whisky constitutes only 2.5% of the total whisky market. The tariff reduction being announced by India on the imports of Scotch Whisky from the UK is over a longer period of time (10 years) and even after that, it will attract significant customs duty of 40%.”The incremental increase in imports of Scotch Whisky, therefore, would not significantly affect the domestic market,” the official said, adding that high duties on imported alcohol have affected the level of foreign direct investment (FDI) in the liquor industry. Liberalisation of duties would invite the UK’s expertise in terms of spirit/wine making, quality control, marketing and consumer awareness.Also Read: Free trade pact between India and UK would enable Indian firms to access new markets: TVS Motor
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