India–UK FTA: Car Quotas Tied to Engine Size and Price; Agriculture, Marine Sectors Gain

India–UK FTA: Car Quotas Tied to Engine Size and Price; Agriculture, Marine Sectors Gain

May 10, 2025 | Trade & Economy | By Raja Das

India and the United Kingdom are inching closer to finalizing their long-awaited Free Trade Agreement (FTA), with fresh details emerging about sector-specific terms. One of the major highlights is a 10% reduction in import tariffs on automobiles, but with a twist: quotas will vary based on engine capacity and price bands, according to a senior Indian government official.

Key Features of the FTA:

Auto Quotas by Engine Size & Price
Tariff Reduction: 10% lower import duty on select UK vehicles
Agriculture & Industrial “Sensitive” Products Excluded
Boost for Indian Grapes, Mangoes & Seafood Exports

Auto Sector: Tariffs and Quotas with a Formula

The FTA does not offer blanket liberalization for car imports. Instead, the 10% tariff concession will be regulated through quota bands that consider the engine size and price of the vehicles. This structure is designed to protect domestic manufacturers, especially in the small and mid-sized vehicle segments, while allowing space for high-end imports.

For instance, luxury vehicles above a certain engine capacity or price threshold may be allowed in larger numbers under the quota, while entry-level cars may face stricter volume limits.

Sensitive Sectors Sheltered

India has successfully excluded several “sensitive” agricultural and industrial goods from the FTA. These are typically products where Indian farmers or manufacturers might face unfair competition from heavily subsidized UK imports.

Export Opportunities for India

While ensuring safeguards at home, India has secured market access advantages in areas where it holds a competitive edge:

• Grapes & Mangoes: India’s premium fruit exports are expected to benefit from easier entry into UK markets.

• Marine Products: Lower tariffs and streamlined certification will help Indian seafood exporters expand their footprint.

• Pharmaceuticals & Textiles: These sectors are also expected to gain from relaxed norms and tariff cuts.

Strategic Significance

This FTA is not just about economics—it holds strategic importance. The UK is seeking stronger trade partnerships post-Brexit, while India is building a diversified export base with Western partners. The agreement is expected to boost bilateral trade, currently valued at around $20 billion annually.

What’s Next?

The final text is under legal scrutiny and is expected to be signed soon. Once operational, the FTA could mark a new era in India–UK trade relations, balancing domestic industry protection with export promotion.

Conclusion:
By tailoring auto quotas and shielding sensitive sectors, India’s negotiators appear to have struck a practical balance. Meanwhile, Indian farmers and exporters stand to gain from new access to high-value UK markets—making this FTA a strategic win for both sides.