The Directorate General of Foreign Trade (DGFT) on Friday notified the procedure for allocating tariff-rate quotas (TRQs) for imports of vehicles from the United Kingdom under the India-UK Comprehensive Economic and Trade Agreement (CETA) that will come to effect from July 15.
The government has outlined the procedure on how importers can apply for tariff-rate quotas (TRQs), where the eligible UK-origin vehicles can be imported at a concessional customs duty of 10% instead of the existing duty of around 110%, subject to annual quota limits.
The TRQs will only be applicable to Original Equipment Manufacturers (OEMs) and dealers or channel partners authorised by UK vehicle manufacturers. Applicants will have to submit a pre-purchase agreement issued by the UK-based OEM specifying the number of vehicles proposed to be supplied during the relevant quota year. Importers will have to submit a valid Certificate of Origin issued by the designated UK authority at the time of customs clearance to claim the preferential tariff benefits.
Submissions for quota allocation will be done online through DGFT's Import Management System, with the application window for each calendar year to be announced separately through public notices.
As per the notification, imports of internal combustion engine (ICE) passenger cars will be allowed at concessional duty within an annual quota beginning with 20,000 units in the first year, rising to 37,000 units in the fifth year, before gradually tapering to 15,000 units from the 15th year onwards. Depending on engine capacity, in-quota customs duty will decline from 30-50% in the first year to 10% over the implementation period.
For electric, hybrid and hydrogen passenger cars, the annual quota will start at 4,400 units in the sixth year, increase to 22,000 units from the 15th year onwards, with concessional customs duty falling to 10% over time.
“If the total TRQ quantities applied for exceed the total number of vehicles that may be imported under the relevant TRQ, the TRQ quantities shall be allocated among all eligible applicants in proportion to the quantity that each eligible applicant has requested on the basis of the pre-purchase agreement,” the notification stated
To discourage hoarding, DGFT clarified that if the importers fail to utilise a significant portion of their allotted quota in a given year may receive lower allocations in the following year. The authority will also monitor cumulative TRQ utilisation and stop issuing certificates once the annual quota is exhausted.
TRQ authorisations will be issued electronically and each authorisation will remain valid for up to 12 months or until the end of the relevant calendar year, whichever is earlier.
The notification also clarified that importers will have to pass on the benefit of the concessional customs duty to the final buyers. The allocation mechanism will be reviewed after two years, from calendar year 2028, to improve utilisation if required.