Thursday, February 02, 2023
By Manoj Kumawat
Buying Imported EVs To Get Costlier In India: Budget Impact
The government of India on Wednesday, February 1, 2023, announced to increase tax on imported electric vehicles including four and two-wheelers. With this, the government wants to encourage the “Make in India” campaign initiated by the honourable Prime Minister Narendra Modi to boost the business of local manufacturers. According to the new tax regime buyers buying imported vehicles below $40,000 will have to pay a 70% tax, instead of the 60% tax charged earlier. According to trade analysts, this hike in the tax will directly affect the demand for imported vehicles.
The tax on cars brought through semi-knocked doors has been increased to 35% from 30%. The announcement regarding a hike in taxes on imported vehicles was made in the Union Budget presented in the Lok Sabha on February 1, 2023. The hike in the tax will come into effect from April 1, 2023.
This decision to hike taxes on imported vehicles by the government is getting criticism from many global auto manufacturing companies like Tesla Inc and others. Carmakers like Hyundai, Kia, Volkswagen, Skoda, Toyota Motors and others sell their cars in India. It would be interesting to know that in recent years the EV market in India has shown encouraging growth. Especially domestic carmakers like Tata Motors and Mahindra & Mahindra are coming up as strong manufacturers of electric cars in the country.
International carmakers selling their luxurious cars in India will be affected by this decision. In the words of Rajat Mahajan, partner, of Deloitte India, this decision may deprive many companies of reaping benefits by selling their vehicles in the country.
