Electric vehicles that are assembled, or imported to India are set to get costlier with Finance Minister Nirmala Sitharaman proposing to raise customs duty on them.
The customs duty on passenger vehicles (cars, SUVs and vans), bus and trucks, three-wheelers and two wheelers that are brought to India in completely knocked down (CKD) form is proposed to be raised to 15 percent, up from 10 percent presently from April 1.
In addition, customs duty on semi-knocked down (SKD) units of bus, trucks and two-wheelers is proposed to be raised to 25 percent, up from 15 percent. Duty on SKD forms of electric passenger vehicles and three-wheelers has been doubled to 30 percent, up from 15 percent.
Sales of the Hyundai Kona and the MG ZS EV, both of which are not manufactured in India, will get impacted by this revision. The newly launched Nexon by Tata Motors, the Tata Tigor EV and the Mahindra e-Verito EV will beat the hike since these models will be manufactured in India.
Most electric two-wheelers and three-wheelers are manufactured in India. Electric buses are also mostly manufactured in India by Tata Motors and Ashok Leyland. There are no electric trucks sold in India presently.
All completely built units (CBU) of commercial electric vehicles will also become expensive as customs duty on them has been raised to 40 percent, up from the present 25 percent. In addition, customs duty on all fully imported (CBU) commercial vehicles has been raised to 40 percent.
A total number of 1,554 electric cars were sold in India between April - December 2019. Hyundai sold 292 units of the Kona, and 669 units of the Tata Tigor EV were sold in this period.
More than 2,800 units of the MG ZS EV has been booked so far since its launch less than two months ago.
The Budget announcement seems to be a push for Make In India to get more companies to manufacture locally. The government hopes that these investments will led to generation of jobs.