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Custom Duty On Electric Vehicles Increased, Hyundai And MG Motors To Get Hit

In a move to encourage make in India, Customs duty on vehicles brought to India in completely knocked down (CKD) form is proposed to be raised to 15 per cent, up from 10 percent presently from April 1.

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Electric Vehicle

Imported electric vehicles are set to become costlier as Finance Minister Nirmala Sitharaman on Saturday announced an increase in customs duty on various kinds of such vehicles as the government pushes to promote local production.

In her budget speech Finance Minister Nirmala Sitharaman said “Under Make in India initiative, well laid out customs duty rates were pre-announced for items like mobile phones, electric vehicles and their components. This has ensured a gradual increase in domestic value addition capacity in India. Customs duty rates are being revised on electric vehicles, and parts of mobiles as part of such carefully conceived Phased Manufacturing Plans. “

To push local manufacturing in the EV segment, the government has increased customs duty on imported completely built units (CBUs) of commercial EVs to 40 per cent with effect from April 1, 2020, from 25 per cent currently.

The finance minister also proposed to enhance customs duty on semi knocked-down (SKD) forms of passenger EVs from 15 per cent to 30 per cent.

Similarly, the government has proposed to hike customs duty on SKD forms of electric buses, trucks and two-wheelers to 25 per cent from 15 per cent currently, with effect from April 1, 2020.

Besides, the customs duty on completely knocked-down (CKD) forms of passenger EVs, three-wheelers, two-wheelers, bus and trucks has been proposed to go up to 15 per cent from the current 10 per cent

This move by the Finance minister will impact the sales of the Hyundai Kona and the MG ZS EV, both of which are not manufactured in India. Meanwhile, the newly launched Nexon EV by Tata Motors, the Tata Tigor EV and the Mahindra e-Verito EV will beat the hike since these models are manufactured in India.

A total number of 1,554 electric cars were sold in India between April - December 2019. Hyundai sold 292 units of the Kona, and 669 units of the Tata Tigor EV were sold in this period. Saic Motors backed MG Motors claims to have received more than 2,800 units of the MG ZS EV so far since its launch less than two months ago.