India's recent FTAs increasingly use tariff-rate quotas rather than blanket duty elimination in sensitive sectors. Examine this trend with reference to the India–UK CETA.

Q. India's recent FTAs increasingly use tariff-rate quotas rather than blanket duty elimination in sensitive sectors. Examine this trend with reference to the India–UK CETA. (15 marks, 250-350 words)

A tariff-rate quota (TRQ) permits a fixed volume of imports at a concessional duty while retaining high tariffs beyond that ceiling. The India–UK Comprehensive Economic and Trade Agreement (CETA), in force from 15 July 2026, exemplifies India's shift from blanket duty elimination towards this calibrated liberalisation in sensitive sectors [1].

Why the TRQ route is preferred - Asymmetric opening: while the UK eliminates duties on about 99% of tariff lines, India opened only 89.5% of its lines, keeping dairy, apples, edible oils and automobiles in the sensitive list [1]. - Volume control over price control: even after duties fall, a quantitative ceiling prevents an import surge — a safeguard blanket elimination cannot offer. - Sequencing infant industries: concessions can be back-loaded to allow domestic capacity to mature.

How CETA operationalises it (automobiles) - Petrol/diesel passenger vehicle CBUs enter at a quota of 20,000 units in Year 1, rising to 37,000 by Year 5, with duty falling from over 100% to 10% within quota [2][1]. - Gradation is by engine size for ICE vehicles but by price band for EVs, hybrids and hydrogen vehicles — protecting the mass-market segment [2]. - EV/hybrid concessions begin only in Year 6, giving Indian manufacturers a five-year buffer to build scale and technology [1][2]. - Reciprocally, Indian low-emission vehicles gain quota-based duty-free access to the UK market from Year 6 [2]. - Implementation is executive, through DGFT quota-allocation notifications under the foreign trade policy framework [3].

Limitations - Quota administration invites rent-seeking, licence-allocation delays and classification disputes at customs. - Consumers forgo the full price benefit; predictability for investors is reduced.

TRQs thus let India reconcile two competing imperatives — credible market access for a G-7 partner and breathing space for the automobile and dairy economies. The way forward lies in pairing such carve-outs with time-bound competitiveness measures like the automobile PLI scheme, so that protection ends in capability rather than dependence. Used well, calibrated liberalisation makes CETA a workable template for the India–EU negotiations ahead.

(~330 words)

Sources: 1. PIB, "India and the United Kingdom Unleash a Next Generation Economic Corridor: CETA … Set to Enter into Force on 15th July 2026" — entry into force; 99% vs 89.5% tariff-line coverage; sensitive lists; 37,000 CBU quota; EV concessions from Year 6 2. UK Government (business.gov.uk), "The UK–India trade deal" — TRQ design: 20,000 units Year 1 to 37,000 by Year 5, duty path, EV quotas from Year 6, reciprocal access 3. Directorate General of Foreign Trade (DGFT), India–UK CETA tariff-quota notifications — quota allocation and administration mechanism