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Imported electric vehicles set to get more expensive as Budget 2023 ups customs duty.

Date: 04-02-2023
Subject: Imported electric vehicles set to get more expensive as Budget 2023 ups customs duty
Following the Union Budget's release, imported electric vehicles are set to get more expensive, with Finance Minister Nirmala Sitharaman announcing a hike in customs duties.

Customs duty on electric vehicles in completely built units (CBUs), other than with cost, insurance and freight (CIF) value of more than $40,000 has been raised to 70%, from 60%.

Similarly, duty on vehicles in CBUs that cost less than $40,000 or have an engine capacity below 3000 cc (petrol)/ 2500 cc (diesel) has been raised to 70% from 60% earlier.

Duty on vehicles in semi-knocked down (SKD) form will also rise, from 30% to 35%.

Sitharaman proposed "to further provide impetus to green mobility, customs duty exemption is being extended to import of capital goods and machinery required for manufacture of lithium-ion cells for batteries used in electric vehicles." The Finance Minister also noted that replacing old polluting vehicles is an important part of "greening the country's economy."

"In furtherance of the vehicle scrapping policy mentioned in Budget 2021-22, I have allocated adequate funds to scrap old vehicles of the Central Government," she said.

As it stands, cars imported as CBUs with CIF more than $40,000 or with engine capacity more than 3,000 cc for petrol-run vehicles and more than 2,500 cc for diesel-run vehicles attract 100% customs duty.

"The Government has proposed to increase the duties on completely built units (CBUs) to 70% from 60% earlier. This is unlikely to have a material impact as most of the luxury cars are now assembled in India, barring the top-end variants. Nonetheless, an increase in customs duty will further aim to promote domestic manufacturing going ahead," Icra Senior Vice President & Group Head Corporate Ratings Shamsher Dewan told PTI.

"Multiple proposals in the Union Budget are seen favourable for the automotive sector. A sharp 33% increase in capital investment outlay, identification of critical transport projects for first and last-mile connectivity, and relaxation in personal tax rates shall aid the demand for the auto sector," Dewan added.

The thrust on green energy continues with specific budgetary allocation for old vehicle scrappage, energy transition, and viability gap funding for battery storage solutions with 4000 MWh.

Source Name:-Economic Times


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