The government has lowered the customs duty on import of parts and components of electric vehicles in a bid to promote domestic assembly of such vehicles in India. The customs duty on vehicle parts and components imported for assembly in India has so far been 15 to 30 percent. But now, the government has drastically lowered it to 10 to 15 percent. The Central Board of Indirect Taxes and Customs (CBIC) has carved out a separate category for parts and components of an electric vehicle for which customs duty has been lowered to 10-15 percent.
Further, the CBIC has removed customs duty exemption to battery packs for electric vehicles and also doubled the duty on battery packs for mobile phones. Henceforth, import of battery packs for electric vehicles will attract 5 percent tax. Customs duty on battery packs for mobile phone has been doubled to 20 percent.
The new rates of duties will come into effect from Wednesday, the CBIC said. "These customs duty rate rationalisations while may increase the cost of import of these goods, but should definitely boost the 'Make in India' initiative of the government," EY Tax Partner Abhishek Jain said.
In a push towards electrification of vehicles, the Delhi government last month introduced a draft policy on electric vehicles that also aims to provide a boost for EV infrastructure in the city. Under this policy, which may be a draft for now but is being hailed as a path-breaking initiative, electric cars would be free of road tax and registration charges and the government would install a charging station every 3 km.
In related news, the government will soon roll out the second phase of the FAME India scheme on a consortia-based approach, a senior official said Monday, adding that in the FAME II mission, the government as of now is going to allocate Rs 350 crore to have a concerted investment in research and innovation.