Import Duty May Be Reduced on Electric Vehicle Parts In India

Jyotis - Dec 08, 2018

The electric vehicle parts which are applied on zero percent duty won’t be affected in this proposal.

Over time, India has paid more attention to developing the electric vehicle (EV) culture. A proposal has recently been given to the Department of Revenue by the Heavy Industries Ministry regarding reducing customs duty on parts of electric vehicles that are one of the primary concerns of an import tariff.

The proposal includes the government’s mission to have 25% EV by 2023 and the determination of new customs duty for completely knocked down (CKD) and semi-knocked down (SKD) kits used to assemble electric vehicles.

Interviewed by PTI, a senior government official said that the Indian government wanted to give a new definition for CKD and SKD kits as well as an appropriate tax structure. The purpose is to increase the number of EVs on national roads. The parts which are applied on zero percent duty won’t be affected in this proposal.

At present, consumers have to pay a zero customs duty on some essential electric vehicle parts such as electric compressors, motors, chargers, controllers, batteries, converters, and energy monitors while they also pay 28% of primary customs duty on other parts like plastics and metals.

Also in the proposal to the Finance Ministry, a few days ago, Heavy Industries Ministry put forward a revised tax structure including a sunset clause which will last long one year. As expected, the proposal will come to the public along with the FAME India scheme which costs Rs 5,500 crore and aims to look for subsidies to develop electric vehicles, charging infrastructure, and hybrid cars.

Three months ago, in September, Heavy Industries Ministry gave the detailed plan to implement the phase two of FAME India scheme. After that, the Expenditure Finance Committee (EFC) of the Finance Ministry offered Rs 5,500 crore to develop this plan.

At the same time, the Prime Minister’s Office has made an effort to spur the production of lithium-ion batteries in the country. This aims to cut down the import as well as help India partially get out of China’s influence.