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, said senior officials.
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 streamlining of customs duty.
At present, key components for EVs, including battery, controller, charger, converter, energy monitor, 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 and semi knocked down kits for EVs along with a tax structure conducive to increasing their presence on roads. However, we will not touch the parts attracting zero per cent duty,” an official told PTI.
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 will also entail a long-term road-map and vision to encourage domestic manufacturing of lithium-ion batteries.