India has provided import duty discounts only in a calibrated and phased manner for passenger vehicles priced above Rs 25 lakh, subject to an annual quota of 2.5 lakh units, thus fully protecting the country’s mass market cars under the trade agreement with EU, the Commerce Ministry official said on Wednesday.According to the official, the quota will largely be extended to traditional automobile manufacturers from the European Union (EU).India and the EU on Tuesday finalised the free trade agreement (FTA), which is expected to be implemented this year.Under the deal, India has granted a total annual quota of 1.6 lakh diesel and petrol vehicles, and 90,000 for electric vehicles (EVs). For cars under 15,000 euros (CIF – CIF – cost, insurance, freight) in value, which is equivalent to a retail price of roughly Rs 25-27 lakh after adding components like customs duty, GST and other taxes like road tax, etc., India has not provided any duty concessions.About 90 per cent of India’s domestic passenger car mass market falls in the sub-Rs 25 lakh price category. The country’s passenger vehicle market, now the third largest in the world, stands at over 43 lakh units annually.“India is granting quota mostly on large-size ICE (internal combustion engines) vehicles and high price range EVs while simultaneously protecting sensitive segments of India’s automotive industry (small size engine capacity ICE vehicles and mid-low price range EVs),” the official said, as per agency.For diesel and petrol vehicles, the quota is divided into three pricing ranges under the agreement. There will be no duty reductions for vehicles costing less than 15,000 euros. In the first year of the agreement’s implementation, import tariff on vehicles costing between 15,000 and 35,000 euros will be lowered to 35 per cent, with a quota of 34,000 units. India now has a 2.5-3 lakh unit market in this band.At present, Completely Knocked Down (CKD) kits imported for local assembly in India attracted a duty of 16.5 per cent. However, under the agreement, the tariffs on these imported kits will be cut by 50 per cent to 8.25 per cent, which will provide European manufacturers to assemble luxury cars (like Mercedes-Benz, BMW and Audi) locally in India at a cheaper cost.Duties on imported luxury cars completely built unit (CBUs) will be lowered from as 110 per cent to 35 per cent, with further reductions to 10 per cent over a transition period. This concessional duty applies to a quota of roughly 2,50,000 cars annually for vehicles priced above Rs 16 lakh. Quotas for electric vehicles (EVs) are expected to start from the fifth year to protect the domestic industry, with duties eventually falling to 10 per cent.As an outcome of the deal, numerous cars from companies like Ferrari, Lamborghini and Porsche will be imported, which is expected to significantly improve the luxury premium car market segment. Over a period of five to 10 years, tariffs on auto components are expected to be removed.