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EV makers seek lower duty on components, batteries
The electric vehicle industry is seeking customs duty rationalisation on batteries, cells, motor, controlling units and other components currently imported by OEMs.
Vehicle makers pay a GST of 18% for batteries. The rest of the components are charged 12% and 18% whereas the EVs are sold at 12% GST. This has created an anomaly which is pinching pure-play electric players — mostly smaller players or startups.
“The GST on batteries is 18% but GST on vehicles is 12%. The components of systems are generally lower than the GST rate so a regular car GST is 28% while components are only at 18%. But in electrics, the government didn’t change the input GST even though they changed the output GST,” said Chetan Maini, co-founder and vice chairman of EV solutions firm Sun Mobility.
In smaller vehicles like scooters, which comprises the bulk of e-vehicles in India, the battery pack cost is 40% of the vehicle price, added Maini. “It’s a big cash issue particularly for pure play electric players many of which are startups including us.” “All OEMs in India import their batteries, cells, motor, controlling units and a few other minor components. If the duty structure on these vehicles ( at a component level ) becomes more clearly pronounced then it will surely see a hockey stick curve growth,” agreed Dhivik Ashok, CEO Go GreenEoT. Also the entire electric mobility eco system is spawning a new set of businesses including battery charging and swapping stations. “Currently charging and swapping are services and the GST on services is 18%,” said Maini. This, he added, is another anomaly. “Energy utilisation to the public should be 5%; why charge the end customer 18% GST?” said Maini.
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That apart, the electric vehicle industry is also rooting for more structural reforms in the eco system. “SMEV recommends a notional green cess on all internal combustion engine vehicles to create a corpus and making EVs and infrastructure an integral of the Smart City project,” said Sohinder Gill, director general, Society of Manufacturers of Electric Vehicles (SMEV).
A top government official has said that the second phase of the FAME (Faster Adoption & Manufacturing of hybrid & Electric vehicles) India scheme will be rolled out around first week of February. In an event on Monday, Arbinda Mitra, scientific secretary, Office of the Principal Scientific Advisor to Government of India said that in the FAME II mission, the government as of now is going to allocate Rs 350 crore to have a concerted investment in research and innovation addressing development of battery and its components, motors using rare-earth magnate materials and electronic control systems.