Customs duty on EV components slashed to 10-15%

To encourage Make In India, the Indian government has slashed the customs duty on electric vehicle (EV) parts and components to 10-15%. Earlier, EV parts and components imported for assembly in India attracted duties of between 15 and 30%. The move will eventually make EVs cheaper and encourage their adoption in India.

January 31, 2019 Uma Gupta

To encourage domestic battery manufacturing, the Indian government has also withdrawn customs duty exemption on assembled battery packs for use in the manufacture of electric vehicles. These will now attract 5% duty.

Image: Craven District Council

According to The Central Board of Indirect taxes and Customs (CBIC) notification, “Electrically operated vehicles, if imported, as a knocked down kit containing all the necessary components, parts or subassemblies, for assembling a complete vehicle with disassembled battery pack, motor, motor controller, charger, power control unit, energy monitor contractor, brake system, electric compressor not mounted on chassis will attract a duty of 10 per cent.”

Those with pre-assembled packs will attract a duty of 15 per cent.

Further, the government has withdrawn customs duty exemption on assembled battery packs for use in the manufacture of electric vehicles. These will now attract 5% duty. The move is intended to spur domestic battery assembly and manufacturing.

While the announcements are in sync with the expectations of the domestic EV battery industry, the latter is also asking for a reduction of the Goods and Services Tax (GST).

“We believe that the government is doing a lot of proactive work since last year to make electric mobility possible. However, a clear and consistent policy needs to be in place to give more confidence to the industry so that long-term investment decisions can be made accordingly,” Priyank Agarwal, vice president-strategy and business development-Mobility, Exicom told pv magazine before the announcement.

He added, “We would like to see reduced import duties on lithium ion cells to encourage domestic battery manufacturing. Also, GST for EV batteries (18%) should be made the same as for EVs (12%).”

Rashi Gupta, director, Vision Mechatronics added, “GST reduction is very important. 18% GST on lithium batteries is still prohibitory. Also there should be some budget allocation for storage projects which will help improve the condition of the power quality as well as open avenues for charging infrastructure required for EVs.”

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