Amid India's push to build a self-reliant manufacturing ecosystem for electronics such as EVs and mobile phones, India seeks to extend exemptions for basic customs duty in the latest budget proposal.
India's Ministry of Finance announced the budget proposal for the next fiscal year (April 2023 to March 2024), and one of its primary goals is to encourage green mobility and electronics manufacturing.
According to the proposal, India extended the customs duty exemption by another year for importing capital goods and machinery required to manufacture lithium-ion cells for EV batteries. India also proposed to lower the basic customs duty on parts of open cells of TV panels from 5% to 2.5% and plans to reduce the basic customs duty for the camera lens and its inputs or parts for manufacturing smartphone cameral modules from 2.5% to zero.
Meanwhile, India's finance ministry also raises basic customs duty for vehicles. Basic customs duty for vehicles in SKD (semi-knocked down) form, with CIF value of more than US$40,000, is proposed to be increased from 30% to 35%, and that for vehicles in CBU (completely built unit) form is planned to be raised from 60% to 70%. Basic customs duty for EV imports in CBU, with a CIF value of more than US$40,000, is also to be raised from 60% to 70%.
According to Nirmala Sitharaman, finance minister of India, thanks to various government initiatives, handsets production in India has increased from 58 million units valued at INR189 billion (US$2.31 billion) in fiscal 2015 to 310 million units valued at over INR2,750 billion, adding that to deepen domestic value addition in mobile phone manufacturing, India's finance ministry proposed to provide relief in customs duty on imports of certain parts and inputs like camera lens and continue the concessional duty on lithium-ion cells for batteries for another year.
Manish Sharma, chairman at Panasonic Life Solutions India, told The Economic Times that reducing customs duties for inputs and parts for electronics products, such as EV batteries, TVs, and camera lens, will improve the feasibility of enhancing backward integration and hence enable local manufacturing of electronics.
Still, The Economic Times quoted Tushar Garg, cofounder and CBO of BluSmart, saying that although EVs come with a 5% GST (value-added tax), GST for components for EVs vary, adding that the EV industry would like to see some more specifics for the sector, such as harmonization and simplification of GST along with a GST reduction for batteries to 5%.
