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05
December 2018
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The Heavy Industries(The Total Investment & Insurance Solutions)
The Heavy Industries Ministry has proposed
reducing customs duty on parts of electric vehicles which are currently not
exempted from import tariff to the Department of Revenue, according to senior officials. The Total Investment & Insurance
Solutions
With
an aim to boost production of electric vehicles (EVs) in the country, the
ministry has also suggested defining semi knocked down and completely knocked
down kits used for assembling EVs for streamlining of customs duty. The Total Investment & Insurance
Solutions
At present, key components for EVs, including
battery, controller, charger, converter, energy monitor, electric compressor
and motor, attract zero customs duty. On the other hand, parts including metals
and plastics attract 28 per cent basic customs duty.
"We have proposed a definition for
completely knocked down (CKDs) and semi knocked down (SKDs) kits for EVs along
with a tax structure conducive to increasing their presence on Indian roads.
However, we will not touch the parts attracting zero per cent duty," a
senior government official told.
The tax structure entailing a one-year sunset
clause was proposed by the Heavy Industries Ministry to the Finance Ministry in
a meeting last week and is likely to be introduced along with the Rs 5,500
crore FAME India scheme entailing subsidies for all categories of electric
vehicles, strong hybrid cars and for establishing charging infrastructure.
The policy to boost EV adoption in the
country will also entail a long-term road-map and vision to encourage domestic
manufacturing of lithium-ion batteries.
The Total Investment & Insurance Solutions
"The idea is to encourage big original
equipment manufacturers to bring CKD and SKD kits in India so that they can be
assembled here and enhance the visibility of EVs. In order that Make in India
gets a boost and does not suffer we have suggested sunset clauses," said
an official.
The Heavy Industries Ministry had drawn up
the blueprint for the second phase of FAME India scheme and received the nod
for sanction of Rs 5,500 crore from the expenditure finance committee (EFC)
under the Finance Ministry in September
However, according to sources, the Prime
Minister's Office had emphasised incentives for domestic manufacturing of
lithium-ion batteries as they are mostly imported from China. The government presently is not in favour of supporting battery swapping as a means to encourage adoption of electric vehicles owing to fears of dumping of batteries from China and the high cost of establishing battery swapping infrastructure, officials said.
While government think-tank NITI Aayog is coordinating among related ministries for the proposals with regard to FAME-II, the Heavy Industries Ministry will implement the scheme once it is approved by the Union Cabinet.
"Battery swapping policy may lead to dumping of Li-ion batteries from China with no proper mechanism for their disposal. The duty on import of Li-ion battery is only going to increase so we are not going to encourage their imports," said another official.
"Reduction in the SKD and CKD rates for electric vehicles will be a welcome step in the direction of moving towards a cleaner energy option. "However, we would be favourable towards promotion of local manufacturing of electric vehicles under the Make in India programme as such remedies would augment the adoption of EVs and showcase the government's long-term vision," said N Naga Satyam, Executive Director - Olectra Greentech Limited. The Total Investment & Insurance Solutions
Olectra Greentech manufactures electric buses in India in a strategic tie-up with BYD Auto Industry Co. Ltd, a leading China-based manufacturer of electric vehicles.
The government has already extended the first phase of the Faster Adoption and Manufacturing of Electric (and Strong Hybrid) Vehicles (FAME-India) scheme by two years until March 31 next year.The Total Investment & Insurance Solutions
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