Influence & Importance of Import Duty on EV Manufacturing in India

Today we are talking about EVs as the top priority for the automobile industry. In India as well as around the world this statement is true. Governments across the world are focusing on motivating EVs as to control the carbon footprint and create a clean energy ecosystem. Having said this, India is all set to take an even bigger leap of becoming the world’s hub for EV manufacturing. 

The government is working hard and smartly towards making India's global leadership in EV Manufacturing. EV is becoming the power tool for controlling carbon footprint as it falls in the top priority of PM Narendra Modi's vision. Union Cabinet Minister, Mr Nitin Gadkari has made firm plans to ensure clean energy usage on Indian roads and that is why Mr Gadkari has a very sincere and aggressive approach towards EVs and EV Manufacturing. Policymaking is also getting proactive towards EV. However, there are global industry leaders like Mr Elon Musk who has a specific observation on India's policy framework towards EV manufactuing.

Recently, Elon Musk of Tesla was quoted in media as "If Tesla is able to succeed with imported vehicles, then a factory in India is quite likely," Musk said on Twitter on Friday. He added: "We want to do so, but import duties are the highest in the world by far of any large country!" 

Here is the tweet from Elon Musk. 

If Tesla is able to succeed with imported vehicles, then a factory in India is quite likely.

— Elon Musk (@elonmusk) July 23, 2021

On the contrary to Mr Elon Musk's statement regarding India's Import Duties, Triton EV's CMD, Mr Himanshu B Patel has a different perspective. He says, "I feel that if one organisation is manufacturing from India the import duty shouldn't affect their business much. Since we are manufacturing from India, we focus more on the export output from India to other parts of the world. For us, what matters most is the availability of an efficient workforce, government's support in establishing best in class manufacturing. And we at Triton EV are thankful to the Central and State governments for such support."

Common sense says that if the manufacturing is happening out of India then the import duties are less effective. The only factor that creates a mark is the procurement of quality raw materials and components.

However, Mr Patel’s views also reflect that his manufacturing plant is more focused on producing and selling Triton EVs across the world and in India as well. 

But Mr. Musk’s tweet shows that he is going to import most of the elements as it is impacting his entire business plan. 

Automotive giants like Tata Motors and Mahindra have made a clear roadmap for their EV strategy. and when we look at the entire stage, the import duties seems to have a minimal impact on producing an  EV from India. However, the import duties on essential EV components are critical factors for EV manufacturing.