The Central Board of Indirect Taxes and Customs (CBIC) now has a separate category for parts and components of electric vehicles (EVs). The introduction of this new category has made some noteworthy changes to the duties applicable on everything that goes into making an EV. The parts and components which earlier attracted import taxes between 15 to 30 per cent will now receive a bump by 10 to 15 per cent. That is surely a welcome development.

However, since there was no separate category for duties applicable on EV components earlier, the battery packs for EVs were under the exemption list of items. In other words, there was no duty applicable. But now, with the new category in place, the battery packs will be slapped on with a 5 per cent duty. The battery pack is one of the most expensive parts in an EV. Even a 5 per cent duty on it will deliver a considerable financial impact to the importer and, eventually, the consumer.

India, in its current state, is not ready to manufacture many major EV components locally. The lowered import duties, therefore, should give automakers some confidence on the fact that India really is serious about transforming its conventionally-powered transportation system to one which helps tackle the problem of rising air pollution.

That said, the central government still needs to have a detailed and rock-solid EV policy for automakers to follow. The lowered import duties on EV parts should act as a stepping stone for automakers to offer affordable EVs to the Indian consumer. That, along with a robust supporting infrastructure, will help our nation to slowly but steadily stop relying on imports and make most of the EV components locally.

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Rachit Shad Trehan
A car nutter by heart. A hopeless engineer by education. Gunning for one goal - simplify cars.

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