Focusing on the EVs sector, from an indirect tax perspective, to support the Indian EV manufacturers blanket of customs duty exemption is expanded to import of capital goods and machinery required for manufacture of lithium-ion cells for batteries used in electric vehicles.
On the other hand, customs duty on EVs imported in semi-knocked down form has been increased from 30% to 35% with NIL social welfare surcharge and customs duty on EVs imported in complete-knocked down form, having CIF value less than $40,000 has been increased from 60% to 70% with NIL social welfare surcharge.
Undoubtedly the changes would support the Indian EV manufacturers to import machinery and equipment required to make batteries for the EVs, which will keep a check on prices of domestically produced EVs as one of the major parts of EVs i.e., lithium-ion batteries will be produced in India. However, fully assembled EVs and EVs assembled in India with imported parts will become costlier with increase in customs duty rate on import of semi-knocked down and complete-knocked EVs.
Smartphone sector and development of electronic components sector
With an aim to reduce the cost for domestically manufactured mobile phones, the Government has reduced customs duty on import of certain parts and inputs like camera lens and continued the concessional duty on lithium-ion cells for batteries for another year, both of which are used in manufacturing of smartphones. This will provide a thrust to strengthen the domestic value addition in the smartphone sector and development of the electronic components sector.
The writer is Partner, S&A Law Offices
