The move to exempt capital goods used to manufacture lithium-ion batteries from Customs duty will lead to localised battery production, reduced cost of electric vehicles and a speedy adoption of electric mobility in the country.

In a boost to the EV ecosystem, the country will see 60 per cent of lithium batteries for transport vehicles being supplied locally by 2027; this is presently zero.

“Even if cell plants start coming on stream under the PLI scheme over the next two years, we will see them supplying to at least half of the market,” said Hemal Thakkar, Director-Consulting, Crisil Market Intelligence and Analytics.

Faster adoption

“The reduction of indirect taxes from 21 per cent to 13 per cent as well as exemption of Customs duty on capital goods and machinery required for the making of lithium-ion cells will lead to faster adoption of EVs. Further, the push for the scrappage policy will support the overall growth of the entire automobile sector,” said Jeetender Sharma, MD and founder of Okinawa Autotech.

EV registrations in the country touched the 1-million mark in 2022. Companies selling EVs said lithium-ion battery prices have been volatile during the December quarter.

“The emphasis on increased infrastructure spends and support for lithium-ion battery manufacturing will be a great multiplier for the industry overall,” said Sudarshan Venu, MD, TVS Motor Company.

Affordable EVs

Industry experts believe that the decrease in Customs duty will reduce the price of EVs.

“With a focus on electrification, relaxation on import duties of lithium-ion batteries will help in price reduction of Electric vehicles, thus making it affordable for the masses,” said Manish Raj Singhania, President, Federation of Automobile Dealers Associations.