Automobiles lobby Siam asks govt to pare customs duty on import of some EV parts

The Society of Indian Automobile Manufacturers (Siam)—a lobby group of vehicle makers—has in a submission to the ministry of finance before the coming budget sought custom duty concessions for certain components of electric vehicles (EVs) that are not currently manufactured in India.

Business Daily Mint claimed to have reviewed a copy letter sent by the industry body to the ministry.

To promote local manufacturing of EVs, Siam has also requested the government not to offer any custom duty concessions to completely built units (CBUs) that are imported. Also, it has asked the government to properly define the completely knocked down (CKD) unit and the semi knocked down (SKD) unit version with regard to EVs.

“We have asked the government to extend certain concessions in custom duty so that certain critical parts or components of an EV which are not yet manufactured in India can be imported at a reasonable rate. Also, we have requested the government not to reduce the custom duty on import of EVs in order to promote local manufacturing of these kinds of vehicles,” said a senior official of Siam on condition of anonymity.

As of now, there is no definition of CKD or SKD versions of EVs. Currently, the taxes levied on import of CKD and SKD versions of vehicles that run on internal combustion engines are different. Since EVs do not have an engine, but a battery and electric motor, both CKD and SKD need to be defined.

“If we have to make EVs, then certain critical parts like lithium-ion batteries, electric motors and many other parts are not made in India and (we) will have to import. There should be a reduction in custom duty so that the cost comes down. At present, most of these parts attract customs duty in range of 7.5-10 percent,” said another official of Siam, also on condition of anonymity.

The industry body has also requested the government to continue to give research and development (R&D) benefits to manufacturers unless the corporate tax comes down to 25 percent. “R&D benefit, which was to the tune of 200 percent, was reduced to 150 percent in April 2017. It will further come down to 100 percent from April 2020. We request that withdrawal of weighted deduction should be after the reduction in corporate tax to 25 percent,” Siam suggested in the document.

“If the Union government wants to bring EVs in India, then it has to promote the new ecosystem along with it. We need to build EVs locally; hence, custom duty should not be reduced. EVs need support from government in form of incentives and reduction in certain taxes,” said Amit Kaushik, managing director, Urban Science India.

The National Democratic Alliance (NDA) government wants only EVs to ply on roads by 2030 as part of its commitment to reduce greenhouse gas emissions under the global agreement on climate change, and to reduce spending on oil imports, which, according to one estimate, could double to an annual $300 billion by that year.