EVs could Get Cheaper With Battery Subsidy Extension – Union Budget 2023
To aid with the electrification of autos and mobility in India, Finance Minister Nirmala Sitharaman announced reductions in customs taxes on items made in India, including lithium-ion batteries, in her Union Budget 2023-24 address. The Government of India’s union minister also declared that the concessional tariff on lithium-ion cells for batteries will be extended for another year.
With this latest declaration, automakers in India will be able to build their own lithium-ion batteries rather of importing them from overseas markets. As a result, corporations would be able to create more jobs in India. Furthermore, with the prolongation of concessional taxes on lithium-ion cells for batteries, it is expected that the country’s EV pricing would stay steady and may even fall if automakers begin producing them in India.
Officials from the EV sectors noted that the statement by the Finance Minister will be tremendously helpful for consumers and businesses. “The proposed customs duty exemptions on the import of capital goods and machinery essential for the manufacturing of lithium-ion batteries bring in a fresh breath of life for all battery producers,” said Pankaj Sharma, Co-Founder and Director of Log9 Materials. “The action would assist speed the country’s manufacturing capability while also providing much-needed impetus to the country’s ambition of being self-sufficient in its EV demands,” he added.
Additionally, Nirmal K. Minda, Chairman and Managing Director of Uno Minda Ltd, claimed that the establishment of a Rs 35,000 crore fund to stimulate green enterprises could considerably advance India’s net-zero objectives. “We look forward to comprehending the FM’s plan to cut the basic customs tariff on selected commodities from 21% to 13%, including lithium and ion cell batteries used in EVs,” he said.
Furthermore, the Union minister indicated that from February 2, 2023, customs taxes for importing autos into the country will be reduced. She also stated that tariffs on all vehicles, including electric vehicles (EVs) imported as Semi-Knocked Down (SKD) or Completely Built Units (CBU), will be cut by up to 10%.
The Union Budget 2023 also indicated that the SKD tax rate for autos (including electric vehicles) will be cut from 35% to 30%. Furthermore, the import duty on CBU vehicles has been decreased from 70% to 60%. This only applies to vehicles that cost more than $40,000 CIF (cost, insurance, and freight) or have engines with displacements greater than 3,000 cc for petrol vehicles and greater than 2500 cc for diesel engines, or both.
Furthermore, the government has decreased the customs charge on the importation of electrically driven automobiles costing more than $40,000 in CBU form from 70% to 60%. The government has also removed the social welfare surcharge (SWS), which was formerly applicable to all categories and was 3% for SKD kits and 6% for CBUs.
