India Slashes Import Duty on Electric Vehicles, Paving Way for Foreign Manufacturers

The finance ministry has notified the lower 15 per cent duty rate on the import of electronic vehicles (EVs) of a minimum value of USD 35,000, subject to certain conditions, as announced under the EV policy. Currently, EV imports attract 100 per cent Customs duty.

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Scheme to Promote Manufacturing of Electric Passenger Cars

Earlier in the day, the Heavy Industries Ministry had notified a Scheme to promote manufacturing of electric passenger cars in India, under which import duty concessions would be given to companies setting up manufacturing units with a minimum investment of USD 500 million. Following that, the finance ministry notified that EVs of a minimum value of USD 35000 can be imported at 15 per cent duty up to year 2031 by companies that set up manufacturing facilities under the scheme.

Tesla's Pitch for Lower Import Duty Rates

Foreign players like Tesla have been pitching with the Indian government to cut import duty rates, but India has been insisting on duty concessions be linked to domestic manufacturing.

Paving the Way for Foreign Electric Vehicle Manufacturing Companies

Nangia Andersen LLP Partner Sandeep Jhunjhunwala said this is likely going to pave the way for foreign electric vehicle manufacturing companies to enter India.

Reduced Customs Duty Rate

A reduced customs duty rate of 15 per cent would be applicable on electrically operated vehicles with a minimum cost, insurance and freight (CIF) value of USD 35,000 and above, at the rate at which it is applicable to completely knocked down units as well. With this amendment, the current customs duty rate of 100 per cent on imported electric vehicles has been reduced substantially and subclassified considering local mode of manufacturing and valuation, Jhunjhunwala said.