India has notified the approval process for importers to avail quota based duty concession, paving the way for import of vehicles at concessional custom duty under the FTA with the UK. This arrangement will come into effect from July 15. Under the Comprehensive Economic and Trade Agreement (CETA), India will reduce tariffs on motor vehicle imports from about 110 percent to 10 percent with quotas set for both sides. India will allow the import of 3.78 lakh units of conventional engine passenger cars from the UK at concessional custom duties during the first 15 years of implementation of this trade agreement.
Who will be eligible to apply for TRQ
“The procedure for allocation of quota based tariff rate (TRQ) under India-UK (CETA) is notified,” the Directorate General of Foreign Trade (DGFT) said in a public notice dated July 9. It said the importer in India will have to produce a Certificate of Origin issued by the relevant authority in the UK at the time of customs clearance of the imported consignment. “Only Original Equipment Manufacturers (OEMs) of vehicles manufactured in the UK, or their duly authorized dealers/channel partners, will be eligible to apply for TRQ,” DGFT said.
DGFT will monitor the cumulative number of TRQ certificates
The Directorate General of Trade also said that to be eligible, each applicant must produce a pre-purchase agreement issued by the UK-based vehicle manufacturer (OEM). This TRQ will mention the number of trains to be supplied during the year. “Year for these imports will mean the calendar period from January 1 to December 31 in India,” DGFT said. DGFT will monitor the cumulative number of TRQ certificates issued. No TRQ certificate will be issued after the prescribed TRQ limit is reached.” It said these certificates will remain valid for a maximum period of 12 months or till the end of the calendar year, whichever is earlier. “Importers importing under TRQ shall endeavor to pass on the benefit of concessional customs duty to the ultimate buyer or consumer,” DGFT said.
How much and how much concession will be given on which vehicles?
The quota of conventional engined passenger vehicles for import from the UK into India will increase to 37,000 units across categories in the 5th year. With this, the custom duty will gradually reduce to 10 percent finally. After this there will be no further reduction in tariff. In the first year, the quota for petrol cars above 3,000 cc and diesel cars above 2,500 cc will be 10,000 units. Custom duty on these will be reduced from 110 percent to 30 percent. The quota for 1,500 cc petrol, 2,500 cc diesel and 3,000 cc petrol cars will be 5,000 units and the tariff on these will be reduced from 66 percent to 50 percent.
No discount for vehicles priced below 40,000 British pounds
According to the document, for mass market cars with engine capacity up to 1,500 cc, import of 5,000 units will be allowed in the first year of the agreement and custom duty on these will be reduced from 66 percent to 50 percent. A total of 20,000 passenger cars in these three categories will be allowed to be imported in the first year of the agreement. India has not opened its market for vehicles priced below 40,000 British pounds (CIF). This will provide complete protection to the mass-market electric vehicle (EV) segment, in which India is looking to achieve global leadership through domestic players like Tata Motors, Mahindra & Mahindra and Maruti Suzuki.
No rebate for first 5 years for electric, hybrid and hydrogen cars
India has not given any concession for electric, hybrid and hydrogen powered passenger cars in the first 5 years. However, from the sixth year onwards, the custom duty on vehicles priced between 40,000 British Pounds (CIF) to 80,000 British Pounds (CIF) (both inclusive) will be reduced to 50 per cent and there will be a quota of 400 units. At the same time, the tariff on such vehicles costing more than 80,000 British pounds (CIF) will be 40 percent and the limit for their import has been set at 4,000.
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