India-UK FTA: No concessions for electric, hybrid, hydrogen vehicles for first 5 years

India’s Commerce Ministry has said that no concessions will be given for Electric, Hybrid, Hydrogen-powered vehicles for the first 5 years under the India-UK Comprehensive Economic and Trade Agreement (CETA).

Stating that India’s commitment in the sector was for a calibrated, phased, and a development-oriented quota-based liberalisation strategy, the Ministry said that its offer pertained exclusively to Completely Built Units (CBUs) of passenger vehicles encompassing Internal Combustion Engine (ICE) vehicles as well as Electric, Hybrid, and Hydrogen-powered vehicles.

As per the Indian government, the concession framework is designed to provide market access to UK exporters mostly on large engine size ICE vehicles and high price range EVs while simultaneously protecting sensitive segments of India’s automotive industry (mid and small size engine capacity ICE vehicles and mid and low-price range EVs).

The offered quota and duty reduction is more on the large engine capacity categories (above 3000 cc petrol /2500 cc diesel). The government has claimed that the reduction ensures that the domestic sector will have sufficient time to expand, innovate, and enhance global competitiveness in its area of strength in small (up to 1500 cc) and mid segment (1500-3000 cc petrol /up to 2500 cc diesel.

The Duty reduction to 10% over 5 years will happen only in-quota, while the out of quota duty reduction is 50% over a period of 10 years. The number of vehicles from ICE engines will get deducted by the number of EV vehicle getting concessions in 6th year onwards to maintain the total quota volume of 37,000 Units at the end of 15 years of duty concession.

For vehicles priced below £40,000, no market access will be provided to ensure complete protection for the mass-market EV segment in India. While the market access in EVs has been given mostly in the high price segment of vehicles priced above £80,000, the government said that India has secured market access to the tune of 4 times of its concession given to UK on EVs in the UK market.