Pre-Budget reductions on the duties imposed on Completely Knocked Down Electric Vehicles and their components paired with a reaffirmation of the Government’s commitment to electric vehicles during the Finance Ministers Budget address rang positivity through the Industry. However, in the mix of reductions on specific components, one very important component that was previously duty-free has now been made taxable at 5%, which could significantly increase the price of electric two-wheelers and cars. Previously both batteries and cells for Electric Vehicles were exempt from duties, but in an effort to protect local manufacturers and the make in India initiative the government chose to levy a 5% duty on fully packaged batteries, however, in the process, the same duty was also levied on electric vehicle cells.
The Electric Vehicle Industry is still at a very nascent stage in India, which means the holistic eco-system for the manufacture of these vehicles is still forming. While there are companies in the country that manufacturer electric vehicle batteries, all cells for Indian Electric Vehicles are imported. While in the long term these taxations could result in sparking an Indian Cell Manufacturing industry, in the immediate circumstance, this could result in a significant increase in prices in electric vehicles. Mahindra’s Managing Director Dr Pawan Goenka estimates, that as a direct result of this policy change the prices of their electric vehicles like the eVerito could go up by up to Rs 16,000. At a time when manufacturers are still struggling to achieve competitive pricing for their vehicles, this kind of offset could seriously affect demand. Dr Goenka advises removal of the duties with a sunset clause, that expires in a certain number of year or until there is a locally manufactured option for cells to provide a win-win option for both manufacturers and the government’s mission for 10 lakh electric vehicles on the road by 2021.
Right now, the Industry is waiting for an action plan for electric vehicles and soon, at this nascent stage, it will be crucial for electric vehicles to become even more accessible to the masses. Â With more manufacturers poised around the fringe to launch electric vehicles in India, this action plan will be crucial to see more electric vehicles in the Private Vehicle segment that will ultimately help forge the transition to greener more sustainable mobility.
