India clears 642 UK car imports under FTA tariff quota as first allocations roll out
The Directorate General of Foreign Trade (DGFT) approved applications from seven of eight companies to import a combined 642 cars from the United Kingdom under the tariff-rate quota (TRQ) mechanism of the India–UK Comprehensive Economic and Trade Agreement (CETA).
This is the first allocation of the auto TRQ since CETA entered into force on 15 July 2026.
Cars imported under the quota attract a concessional customs duty rather than the standard rate, with the concessional rate set to decline further over the life of the agreement, eventually reaching 10%.
The 642-unit uptake is modest relative to the total quota available for the year, suggesting a cautious initial response from importers to the new facility.
Tariff-Rate Quota (TRQ) Mechanism
A tariff-rate quota applies a lower "in-quota" tariff to a specified quantity of imports and a higher "out-of-quota" tariff to any imports beyond that quantity, rather than imposing a hard physical limit on how much can be imported. TRQs originated from the Uruguay Round's "tariffication" of earlier non-tariff quota barriers under the WTO Agreement on Agriculture and are now also used in bilateral FTAs for sensitive sectors like automobiles.
The 642-car allocation is the first real-world test of the CETA auto TRQ, and it shows the mechanism operating as designed, only a fraction of the eligible companies and volumes have taken up the concessional route so far.
India–UK CETA
The India–UK Comprehensive Economic and Trade Agreement (CETA) is a bilateral free trade agreement concluded after roughly three years of negotiation across multiple rounds. It covers goods, services, investment, and related areas such as social security contributions through a companion agreement.
Key Details
- CETA was concluded on 6 May 2025 and formally signed on 24 July 2025 in London.
- It entered into force on 15 July 2026, alongside a companion Double Contribution Convention on social security.
- It is a comprehensive FTA (covering goods and services with tariff schedules and rules of origin), distinguishing it from narrower instruments such as a Trade and Investment Framework Agreement (TIFA) or a Preferential Trade Agreement (PTA) with limited product coverage.
- It follows India's other recent comprehensive trade pacts, such as the India–UAE Comprehensive Economic Partnership Agreement (CEPA), which came into force in 2022, and the India–Australia Economic Cooperation and Trade Agreement (ECTA).
The auto TRQ implemented through DGFT is one of the concrete, sector-specific commitments made under CETA, and its administration (approving specific companies for specific quota volumes) illustrates how India operationalises FTA commitments through its trade bureaucracy rather than through blanket tariff notifications.
- CETA entered into force on 15 July 2026; it was concluded on 6 May 2025 and signed on 24 July 2025.
- DGFT approved 7 of 8 applicant companies for a combined 642 cars in the first TRQ allocation.
- The concessional in-quota tariff on UK-origin cars is set to fall in stages to 10%, down from India's standard tariff on imported cars, which can be as high as around 110%.
- DGFT (Directorate General of Foreign Trade), under the Ministry of Commerce and Industry, administers the TRQ allocation process.