Budget 2019 did little to help alleviate the slump in the auto industry. However, finance minister Nirmala Sitharaman, has rolled out incentives to encourage local manufacturing especially for electric vehicles.
Going through the fine print of the budget, you will find that customs duty on imported vehicles has increased further. Customs duty on imported vehicles goes up from 25 percent to 30 percent now, an increase of 5 percent.
While this is not likely to affect a large number of players, it will hit those who import and sell cars as completely built units (CBUs) in India. These include some models from Mercedes, BMW, Audi, Jaguar and Volvo.
What’s interesting though, is while the government is encouraging electric vehicles on one hand, companies that are planning to import and sell electric cars in India will be hit with a higher customs duty demand.
Audi for one is planning to sell the Audi e-tron in India later this year. The Audi e-tron SUV comes with a 95kWh lithium-ion battery pack, powering a dual motor system that has a combined output of 408 hp and 664 Nm of torque, with a claimed range of 400 Km.
Audi isn’t the first luxury carmaker to go electric though. BMW has been testing the fully electric i3S in India too. And Tesla has been talking of an India entry for a couple of years now, with the Model 3 being its first contender.
Compare that with the current crop of electric cars in India - the Mahindra e-Verito and Tata Tigor at the bottom end hardly do about 110 Km on a charge, while vehicles like the Hyundai Kona and MG eZS that will soon be made in India can do between 350 Km and 500 Km on a charge.
These cars will not be hit with customs duty and, in fact, would become cheaper due to exemption of customs duty on components for electric vehicles. They will also be more accessible with tax incentives on loans for electric vehicles.
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