Electric Vehicle Import Duty in India: A Complete Guide

Certainly! EV import duty in India— What is it?

This includes the Import Duty on a Fully Imported Electric Vehicle (CBU – Completely Built Units).

In India, the import duties on fully assembled vehicles or CBUs differ depending on the price tag of the electric vehicle coming in. These duties are imposed by the Indian government to control import and promote local manufacturing.

Here’s the thing: this is how the import duty works for EVs:

a) In case the Vehicle is below 40,000 USD (approx. INR 30 lakh) : Electric Vehicle Import Duty in India

Electric Vehicle Import Duty in India: Import duty for vehicles is 60% on the CFR value

So imagine if the EV price is $35,000 (roughly INR 26 lakh), the duty would be 60% on that $21,000 (INR 15.6 lakh). This would lead to a sharp increase in the total cost of the vehicle because of this duty.

b. In Case the Vehicle Price is More Than $40,000 (around INR 30 lakh):

The charge for importing vehicles is 100% of the CIF value of the vehicle.

If the vehicle costs USD 50,000 (about INR 37 lakh), the duty shall be 100% of that, ie, USD 50,000 (INR 37 lakh). In this instance, the import duty would nearly double the overall price of the car. Electric Vehicle Import Duty in India.

Goods and Services Tax (GST)

Electric vehicles are also levied with Goods and Services Tax (GST) in addition to the import duty. Electric Vehicles attract a GST rate of 5%.

Electric vehicles are also levied with Goods and Services Tax (GST) in addition to the import duty. Electric Vehicles attract a GST rate of 5%.

This is significantly lower than the 28% GST levied on conventional internal combustion engine (ICE) vehicles in India, and makes EVs more affordable.

So if an imported EV is priced at INR 30 lakh (including the import duty), the GST would amount to 5% of INR 30 lakh, or INR 1.5 lakh. This would then be included in the total cost.

Ev Price Effect of Import Duty and Taxes

Let’s look at a sample calculation to see how import duty and taxes inflate the price of an imported EV:

Example 1: $35,000 EV (approx INR 26 lakh)

Import Duty (60%): 60% of INR 26 Lakh = 15.6 Lakh

GST (5%): 5% of ₹41.6 lakh (total end duty) = ₹2.08 lakh

Total Price: INR 26 lakh + INR 15.6 lakh + INR 2.08 lakh = INR 43.68 lakh

A similar EV priced at $50,000 (around INR 37 lakh) would be subject to a customs duty of about 100% or $50,000.

Import Duty (100%): 100% on INR 37 lakh = INR 37 lakh

GST (5%): 5% of 74 lakh (total after duty) = INR 3.7 lakh

Overall Expense: 37 Lakh + 37 Lakh + 3.7: 77.7 Lakh

As you can see, the import duties and taxes practically double the price of imported EVs, particularly for the more expensive options. This is one of the reasons global automakers are establishing local manufacturing units in India or assembling their EVs in the form of CKD or SKD kits (described in detail below) to bring the cost down.

Import Duty on Semi-Knocked Down (SKD) & Completely Knocked Down (CKD) kits

Additionally, international automakers often choose to import Semi-Knocked Down (SKD) or Completely Knocker Down (CKD) kits as the import duties on fully built cars are higher, while some local assembly is still possible. In this case:

SKD Kits (semi knocked down vehicles): This is also subjected to import duty of approximately 15 Percent. It goes on to explain that while the vehicle is shipped in terms of major components – if not the complete chassis, engine, and battery – some regional assembly is still needed at the destination.

CKD Kits (virtually completely stripped vehicles): these are subject to an import duty of approximately ten percent, which is lower than that for SKD kits. It helps automakers to save on import duties when they assemble the vehicles locally.

Automakers reducing their cost of production in India using SKD and CKD kits. So this also benefits the government, because it thereby encourages local manufacturing and employment, which is what India naturally wants, one of the motives behind the Make in India initiative.

Incentives to Build EVs Where You Live : Electrical Vehicle import duty in India

The Indian government, even more, wants to motivate EV manufacturing on the domestic front and minimize dependency on imports

This scheme encourages the adoption and manufacturing of both hybrid and electric vehicles by providing financial support and is known as the FAME II Scheme. Under this scheme, the government provides subsidies for EV buyers as well as incentives for manufacturers to create EVs in India.

Production-Linked Incentive (PLI) Scheme: The second initiative is the PLI scheme which provides financial incentives for the domestic production of EVs and components thereof (e.g., batteries). The production-linked incentive (PLI) scheme strives to enhance local output and lure foreign investments.

This mechanism is designed to lower the overall price of locally manufactured EVs, and thus competitively substitute imported cars.

Conclusion

Import Duty on Complete Built Units (CBUs/ Fully Imported EVs): 60% for price below $40,000, 100% if above $40,000

GST: 5% of the total price of the vehicle (including import duty).

SKD and CKD Kits: Import duty between 10 per cent to 15 per cent, based on the level of local assembly.

While making EVs cheaper in India, car makers usually assemble SKD or CKD (kit form) vehicles here to enjoy lower import duties. To enhance the local manufacturing of electric vehicles and make them more affordable for Indian consumers, the government has launched schemes like the FAME II and PLI.