UK wants tariff quota on electric vehicles as part of FTA, says source

India and the UK are currently in the midst of negotiating their Free Trade Agreement.

The UK has asked for tariff-rate quotas on its electric vehicle (EV) exports to India as part of the ongoing Free Trade Agreement (FTA) negotiations, a government official said. "They are asking for quota for concessional duty for EVs," the official said on the condition of anonymity.

Also Read: Tesla likely to import completely built up EVs from German facility to India

A concessional duty, or tariff-rate, quota is a system where a certain amount of imports - in this case, EVs into India from the UK - attract a lower rate of tariff, with a higher rate applying to imports over and above that threshold level.

According to the source, the UK is looking for new markets to export electric vehicles, with the sale of new petrol and diesel-powered cars banned in the European nation from 2035.

"The UK auto market is export driven... It is looking for export markets for EVs beyond the European Union," the official added.

The comments from the government official comes after Bloomberg reported on November 8, quoting sources, that India is proposing to cut the import duty on some EVs from the UK to ensure the FTA with the island nation is agreed by the end of the year. According to the Bloomberg report, India is considering a concessional tariff of 30 percent on 2,500 EVs imported every year from the UK priced above $80,000.

Currently, India has an import duty between 70 percent, on vehicles up to $40,000, and 100 percent on vehicles above $40,000.

Also Read: India likely to lower import levy on EVs to attract Tesla

India and the UK have been locked in talks over their proposed FTA for some time now, with the original deadline to sign the agreement being Diwali 2022. However, officials from the Indian commerce ministry said on November 15 that India and the UK governments are "not working with any deadlines" when it comes to finalising the FTA and were instead working with 'timelines'.

According to Joint Secretary Nidhi Mani Tripathi, India's Chief Negotiator for the FTA negotiations with the UK, there have been "continuous exchanges at all levels" to iron out differences and that majority of the chapters are either closed or at advanced stage of negotiations.

Earlier this week on November 13, External Affairs Minister S Jaishankar said he hoped India and the UK will find a "landing point" on the FTA which will work for both the countries. The external affairs minister is in the UK on a five-day official visit and has already met his newly-appointed counterpart, former UK Prime Minister David Cameron.