FM Nirmala Sitharaman says no proposal to lower import duty on EVs as of now

Union Finance Minister Nirmala Sitharaman on Friday said that there is no proposal before the ministry to lower import duty on electric vehicles (EVs). She was speaking at the B20 Summit India 2023, which is being held in Delhi. 

Earlier in the day, Reuters reported that India is working on a new EV policy that would slash import taxes for automakers that commit to some local manufacturing, following a proposal by Tesla which is considering entering the domestic market.

The report further said that the Centre is mulling over potential import tax cuts for EV manufacturers willing to establish their production facilities in the country. The import duty revision can come as a significant boost to PM Narendra Modi’s plan to drastically escalate the nation's EV production capacity.

The government is considering slashing the import duty on EVs to 15 per cent from 100 per cent, if the automakers commit to manufacturing at least 40 per cent of the vehicles locally, Reuters quoted sources as saying.

The import duty cut is seen as an attempt to attract Tesla and other global automakers to set up manufacturing plants in India. Tesla has been in talks with the Indian government for over a year about entering the market, but has been reluctant to do so due to the high import duties.

The Narendra Modi-led government has set a target of achieving 30 per cent electric vehicle sales by 2030. In order to achieve this target, the government is offering a number of incentives to EV buyers and manufacturers, including tax breaks, subsidies, and the creation of a charging infrastructure.

Economic reforms and investment

Speaking at the summit, FM Sitharaman said India has accelerated pace of economic reforms in the last nine years and added that the measures implemented by the Centre have incentivised states to increase their capex spending.

Sitharaman asked the attendees to look at the incumbent government as a responsive and stable policy-giving government. "Look at us for opening up the economy in sectors no one expected like space."

"India has actually showcased an accelerated pace of economic reforms in the last nine years. The share of capital expenditure in total expenditure rose from 12.3 percent in FY18 to 22.4 percent in FY24 (BE)," said Sitharaman at the B20 Summit.

Free Trade Agreements

Sitharaman on Friday said that the free trade agreement with the UK is closer, and would be very soon. While speaking at the B20 Summit India 2023, Sitharmana also said that talks with Canada on the same “may happen soon.”

This comes after UK Secretary of State for Business and Trade Kemi Badenoch on Thursday said the trade pact talks with India are in the final stages. He also said that India and the UK are “actively” discussing business mobility under the proposed FTA, and clarified that the overall visa liberalisation issues do not come under the ambit of trade pacts.

"We are continually making efforts for it along with the commerce ministry. The speed it is going now is this year we should conclude the agreement in the FTA," the FM said.  

Also read: With Tesla push, India considering to slash import tax on EVs built locally: Report

Also read: India stands as a beacon of growth to achieve 7% growth: Tata Sons' N Chandrasekaran at B20 Summit India 2023