Budget 2020

Budget backs Electric Vehicles, but no sops announced

Giriprakash KV Bengaluru | Updated on February 01, 2019 Published on February 01, 2019

Duty on battery cells for EVs dampens the spirit of ‘Make in India’, feels industry

The decision to increase the import duty on battery cells for electric vehicles may seem to go against the Centre’s stated policy of ‘Make in India’, but analysts say that it will create an ecosystem for the EV industry.

The government has said that the import duty on lithium ion batteries will be 5 per cent against the earlier zero duty which is the same as that of the duty on battery packs.

The Central Board of Indirect Taxes and Customs (CBIC) has also set up a separate category for parts and components of electric vehicles for which customs duty has been lowered to 10-15 per cent.

The pioneer of electric cars in India, Chetan Maini, told BusinessLine that the duty for cells of Li Ion batteries from 0 per cent to 5 per cent will increase the prices of EVs.

Prices may rise

“This does not send the right signal if government on the other hand is saying we should promote EVs. Duty on battery packs are same as cells, which encourages import of full battery packs,” he pointed out.

He said such a duty structure is against the make in India policy as it promotes imports. He wanted the government to maintain duty for Li Ion cells for use in EVs to zero and possibly increase Lithium Ion battery pack import duty to 10-15 per cent.

But L Badrinarayana, Partner, Lakshmikumaran & Sridharan Attorneys, said that making electric vehicles is a long way off.

“The only way to kickstart the process is to allow imports of EVs which will create an ecosystem of infrastructure which will eventually lead Indian entrepreneurs building their own vehicles,” he said.

Against ‘Make in India’

Tarun Mehta, co-founder and CEO of Ather Energy, said that while the decision of the Department of Revenue to give relief on import duty of lithium-ion cells was laudable, reduction of the custom duty on the knocked down kit of vehicles, however, goes against the spirit of ‘Make in India’ since it might lead to flooding of the market with low-quality vehicles.

Dhivik Ashok, CEO, Go GreenEoT Pvt Ltd, which makes battery-operated electric two-wheelers, said the decision to increase duty on batteries will create an obstacle in wide adoption of EVs but expected the government to revise the policy framework to attain the target of 30- 40 per cent EVs.

Published on February 01, 2019
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