Government slashes customs duty on Electric Vehicle parts to half

To encourage electric vehicle makers to assemble in the country, the government has cut down customs duty to 10-15 percent from 15-30 percent.

As per Central Board of Excise and Customs notification, a knocked down kit, a kit containing the parts needed to assemble a product, for assembling electric vehicle with disassembled battery pack, motor, brake system, and others, which are not mounted on chassis, will attract 10 percent import duty. If the same is done in pre-assembled packs then the tariff will be 15 percent.

The move will make importing greener vehicles cheaper in comparison to petrol or diesel vehicles.

Meanwhile, fully built EVs will continue to attract 25 per cent import duty, whereas petrol and diesel fired engines face up to 100 per cent levy.

The electric vehicle industry has also been seeking structural reform. Last week, the industry had asked for customs duty rationalisation on batteries, cells, motor and other components imported by original equipment manufacturers (OEMs). The slash in customs duty will make EV makers happier.

The government has been trying to maximise the use of EV in the country to achieve complete electrification by 2030. Pollution is also one of the factors that have driven the adoption of the project. The Delhi govt officers are also asked to switch over to EV.

The import duty changes are seen to be part of a wider policy push by the PMO.

Car makers like Maruti Suzuki, Mahindra and even Tata Motors have already begun their campaign as far as electric cars are concerned. In early 2018, Toyota and Suzuki had signed a MoU to make EVs in the Indian market by around 2020.

Last month, NITI Aayog had proposed incentives of up to Rs 25,000-Rs 50,000 be directly transferred to EV buyers and impose a levy on petrol and diesel cars. The govt also eyes to create jobs and generate more investment through EV project.

Besides, the govt plans to allocate Rs 350 crore to have a concerted investment in research and innovation addressing the development of battery and its components in the second phase of FAME, which will kick off from February first week.

The report first appeared in TOI.