The Minister of State for Commerce and Industry, Som Parkash, said in Parliament that the government has no plans to provide subsidies on the import of electric vehicles. The minister’s comments came amidst reports that the government is working on a new electric vehicle policy that would cut import tax for automakers.
“Presently, there is no proposal either to provide an exemption from local value addition cost or to provide subsidy on import duty on import of electric vehicles in India,” Prakash said in Lok Sabha.
He was answering questions on the government’s proposals under consideration for subsidy on import duty. Recently, there have been media reports that the government is considering allowing automakers to import completely built units (CBU) of electric vehicles in India with tax as low as 15 percent for cars that cost over $40,000 (around Rs 32 lakh). Currently, cars imported as CBUs attract 100 percent customs tax if they cost over $40,000 and 70 percent if they cost less than that.
The reduction in import tax was initially pitched by Tesla, which has plans to make significant investments in India. Talks between Tesla and the Indian government reopened after Elon Musk met Prime Minister Narendra Modi earlier this year. It was stalled earlier as the government asked the automaker to commit to domestic manufacturing before reducing tariffs.
Homegrown automakers Tata Motors and Mahindra have reportedly reached out to the government and raised concerns on plans for lower import tax for electric vehicles.
The minister said that the government has introduced GST, reduced corporate tax, made improvements in ease of doing business, FDI policy reforms, measures for reduction in compliance burden, and a phased manufacturing programme to boost domestic and foreign investments in India under the Make in India initiative.
The government has also launched a production-linked incentive scheme for the automobile and auto component industry with a budgetary outlay of Rs 25,938 crore to boost domestic manufacturing of electric vehicles and their components. In addition, there is also a similar output-linked incentive scheme for advanced chemistry cell battery storage with a budgetary outlay of Rs 18,100 crore to boost battery production in the country.
Reports said that Tesla might reportedly sell cars in India via the CBU route and start manufacturing cars here at a later date.
Hormazd Sorabjee
Sahil Kukreja
