No duty cuts by India on diamond, silver, smartphones, optical fibres to UK under FTA

New Delhi: India will not give any duty concessions to British businesses on a number of sensitive industrial goods like diamond, silver, smartphones, and optical fibres under the free trade agreement (FTA) with the UK, an official said.

The official also said the duty concession on imports of petrol and diesel engine vehicles from the UK is limited to pre-defined quota.

Similarly, the quota for imports of British electric vehicles (EVs) at concessional rate of customs duty is limited only to "few" thousands.

Sensitive industrial goods like plastics, diamond, silver, base stations, smartphones, television camera tubes, optical fibres, optical fibres bundles and cables have been kept under exclusion list of the FTA.

No import duty benefits are given on these goods by India to the UK.

On opening up the auto sector, the official said that 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.

Despite India's strong manufacturing base, its share in the globally traded auto market remains subdued, highlighting a vast scope for expansion.

The access to UK market for ICE (internal combustion engine) vehicles has the potential to boost the country's auto and auto components exports.

"No out of quota duty reduction for EVs. The sensitivity related to EVs has been taken care of. The out of quota duty on ICE vehicles will be reduced gradually over a longer period of time, thereby helping our industries absorb the incremental increase of imports from UK," the official added.

India and the UK on Tuesday sealed a landmark free trade agreement that will lower tariffs on 99 per cent 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 from the present $60 billion.

Tariffs on automotive imports will go from over 100 per cent to 10 per cent under quotas on both sides, benefiting companies such as Tata-JLR.

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).

Tata 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.

India’s total passenger vehicle imports from the UK was only USD 2.75 million or 60 units in 2024.

Most auto manufacturing units in Britain make premium and luxury brands, such as Bentley, BMW, Rolls-Royce, and Aston Martin.

Saurabh Agarwal, Partner & Automotive Tax Leader, EY India, said:"This deal should really help our auto component makers sell more in the United Kingdom. At the same time, Indian consumers might be able to buy premium cars at the right price point as soon as they are launched globally. It probably won't shake up our Indian car manufacturers too much because most Indian consumers still prefer the more affordable options."

Further under the FTA, India has taken a longer period for phasing out duties on a number of items such as ceramics, petroleum products, chemicals like carbon, red phosphorus, sulphuric acid, boric acid, aircraft engines, and engineering equipment.

In 2023-24, India's merchandise exports to Britain was $12.92 billion, while imports stood at $8.41 billion. The trade gap is in the favour of India.