Electric Vehicles In India To Become Cheaper — Import Duty For EV Parts And Components Reduced

Electric Vehicles (EV) in India will soon become cheaper. The Indian government on 29th January 2018, has reduced the import or customs duty on EV parts and components from 15-30% to 10-15% in order to promote emission-free mobility in the country.

ET Auto shares that this import duty reduction on electric-vehicle components further improves the feasibility of their local assembly. As of now, only a few Indian EV brands such as Mahindra Electric, Tata Motors and Ather Energy; locally manufacture their products. However, their products are priced relatively higher than fossil-fuel-powered alternatives due to the need of importing essential components.

The Central Board of Indirect Taxes and Customs (CBIC) has made a separate category for parts or components of EVs. However, the board has removed customs duty exemption to EV battery packs and doubled the duty on mobile phone batteries.

In other words, importing battery packs for electric vehicles will attract five per cent tax. Meanwhile, customs duty on mobile phone batteries has now doubled to 20 per cent.

It was only recently when we shared that electric vehicles in India could become free of tax. The National Institution for Transforming India or NITI Aayog, the 'policy think tank' of the country, suggested that EVs should be road-tax-free to reduce their market price and also to boost the growth of electric mobility in India.

Though chances for that to happen are less, we can certainly expect a strategic move from both the government and manufacturers to promote electric vehicles in the country. As of now, the popularity of such alternative means of transportation is much lower than that of conventional petrol/diesel-powered examples.

Abhishek Jain, Tax Partner at Ernst & Young shared, "These customs duty rate rationalisations while may increase the cost of import of these goods, but should definitely boost the 'Make in India' initiative of the government."

With more and more support from the central government, electric vehicles can someday become a logical option. At present, EVs are best suited for urban environments which have enough supporting infrastructure (charging stations, service centres, etc.)

Thoughts On Electric Vehicles Becoming Cheaper In India

At some point in the future, electric vehicles will be an integral part of India's transportation section. With the rising fuel prices and emission levels, the government is determined to make a smooth shift to electric mobility within at least a decade. Will it become successful? This is something we have to wait and see.