After several rounds of negotiations that resumed in February 2025, India and the UK have officially signed a free trade agreement. The pact is aimed at boosting bilateral trade and economic cooperation between the two countries.
One of the major automotive benefits of the deal is for internal combustion engine (ICE) vehicles imported from the UK. Starting from the first year of the agreement, tariffs on UK-made ICE cars will drop to 30–50%. A quota of 20,000 vehicles per year will apply initially.
Electric, hybrid, and hydrogen fuel cell vehicles priced below £40,000 (CIF) will not have any tariff benefit under the new deal. This move ensures minimal impact on the home-grown new-energy vehicle manufacturers.
For zero-emission vehicles priced between £40,000 and £80,000, import duties will initially be set at 50% with a quota of 400 units, gradually reducing to 10% with a 2,000-unit quota by the fifteenth year. For vehicles priced above £80,000, duties will start at 40% with a 4,000-unit quota, eventually dropping to 10% with an expanded 20,000-unit quota in year fifteen.
The agreement does not lower tariffs on imports beyond the set quotas for zero-emission vehicles, ensuring that India's domestic EV and hybrid industry stays protected. This balance supports green mobility growth without threatening local manufacturing efforts.