India excludes diamonds, smartphones, optical fibres from duty cuts in UK trade pact
Under the landmark FTA with the UK, India protects key domestic industries by excluding items like smartphones, diamonds, and EVs from tariff cuts. Auto imports allowed under tight quotas.
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India has decided not to offer duty concessions to British businesses on a host of sensitive industrial goods including smartphones, diamonds, silver, and optical fibres, under the recently concluded free trade agreement (FTA) with the United Kingdom, a senior government official said in a PTI report.
The FTA, signed on May 6, seeks to double bilateral trade to USD 120 million by 2030, but India has opted for a cautious approach in areas deemed strategically or economically sensitive.
Goods such as plastics, base stations, television camera tubes, and bundled optical cables have been placed on an exclusion list, meaning no customs duty reductions will be extended on their import from the UK.
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The official noted that while the agreement includes concessions for UK automobile exports, these are capped within strict quotas. Petrol and diesel engine vehicles will enjoy lowered duties, but only under pre-defined quotas, the report added.
For electric vehicles (EVs), the number of units eligible for concessional duty is limited to just a few thousand, with no out-of-quota benefits.
“There is no blanket reduction. The sensitivities around EVs have been addressed. Any out-of-quota ICE vehicle imports will see a gradual reduction in duty over an extended timeline,” the official clarified in the report.
India, the fourth-largest automobile producer globally, is leveraging its robust domestic industry while safeguarding it from being swamped by premium imports. The deal is expected to aid Indian automakers and component manufacturers in tapping into the UK market, especially for internal combustion engine (ICE) vehicles and related components.
“This should help our auto component makers gain ground in the UK,” said Saurabh Agarwal, Partner and Automotive Tax Leader, EY India in the report.
Current passenger vehicle imports from the UK are minimal – only 60 units worth USD 2.75 million in 2024. Most UK manufacturing units cater to high-end segments, producing brands like Bentley, Rolls-Royce, and Aston Martin.
Meanwhile, India’s domestic EV market is steadily growing. According to the Federation of Automotive Dealers Associations (FADA), electric passenger vehicle sales surged 56.87% in April 2025 over the previous year, with Tata Motors maintaining leadership at 4,436 units, followed by JSW MG Motor India and Mahindra & Mahindra, the report added.
Under the FTA, India has also taken a longer phase-out period for duties on several other products including ceramics, petroleum goods, various chemicals, aircraft engines, and engineering equipment – further emphasizing the calibrated approach taken in the deal.
India exported USD 12.92 billion worth of goods to the UK in FY 2023-24, against imports of USD 8.41 billion – a trade surplus in India’s favour.
