Heavy Industries Ministry Proposes Reducing Customs Duty On Electric Vehicles Parts

To boost production of electric vehicles (EVs) in the country, the ministry has also suggested defining semi knocked down and completely knocked down kits used for assembling EVs for streamlining of customs duty.

The Heavy Industries Ministry has proposed reducing customs duty on parts of electric vehicles which are currently not exempted from import tariff to the Department of Revenue, according to senior officials.

With an aim to boost production of electric vehicles (EVs) in the country, the ministry has also suggested defining semi knocked down and completely knocked down kits used for assembling EVs for streamlining of customs duty.

The tax structure entailing a one-year sunset clause was proposed by the Heavy Industries Ministry to the Finance Ministry in a meeting last week and is likely to be introduced along with the Rs 5,500 crore FAME India scheme entailing subsidies for all categories of electric vehicles, strong hybrid cars and for establishing charging infrastructure.

The policy to boost EV adoption in the country will also entail a long-term road-map and vision to encourage domestic manufacturing of lithium-ion batteries.

The Prime Minister's Office had emphasised incentives for domestic manufacturing of lithium-ion batteries as they are mostly imported from China.

The government presently is not in favour of supporting battery swapping as a means to encourage adoption of electric vehicles owing to fears of dumping of batteries from China and the high cost of establishing battery swapping infrastructure, officials said.

While government think-tank NITI Aayog is coordinating among related ministries for the proposals with regard to FAME-II, the Heavy Industries Ministry will implement the scheme once it is approved by the Union Cabinet.

"Battery swapping policy may lead to dumping of Li-ion batteries from China with no proper mechanism for their disposal. The duty on import of Li-ion battery is only going to increase so we are not going to encourage their imports," said another official.


#reducing customs duty, #electric vehicles, #boost EV, #battery swapping, #NITI Aayog,  #FAME-II, #Union Cabinet, #Battery swapping policy 

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