India’s 2020-21 Budget Raises Tariffs on Electric Vehicles to Promote Localization

The Indian government, which advocates “Make in India” to promote the manufacturing industry, continues its policy of raising tariffs in the automobile sector with a focus on protecting and nurturing the domestic industry. Under these circumstances, in the 2020-21 budget draft announced in February 2020, the increase in import tariffs on products and parts related to electric vehicles and exhaust gas was conspicuous.

Regarding electric vehicles, tariff on buses and trucks imported in CBU form was raised from 25% to 40% on April 1, 2020, in line with India’s Phased Manufacturing Program (PMP) which promotes local production of various products. The Indian government originally proposed raising it to 50%, but eventually set it to 40%. Looking at SKDs, tariff has increased from 15% to 30% on passenger vehicles and three-wheelers, and from 15% to 25% on buses, trucks and motorcycles. As for CKDs, tariff increased from 10% to 15% on all vehicle types. Affected models as of February 2020 were the Hyundai Kona Electric and SAIC Motor’s MG ZS EV which were imported in CKD form. In addition, electric buses assembled by Olectra Greentech from components imported from China’s BYD were also impacted by the increase in tariffs.