Fixing Inverted Duty Structures Seen as Key to Faster EV Adoption in India – EQ
In Short : Industry stakeholders believe correcting inverted duty structures is essential to accelerate electric vehicle adoption in India. Higher import duties on components compared to finished products are raising manufacturing costs and limiting domestic value addition. Rationalizing duties could strengthen local EV manufacturing, reduce vehicle prices, attract investments, and support India’s broader electrification and clean mobility goals.
In Detail : Industry players have emphasized that correcting inverted duty structures has become critical for accelerating electric vehicle adoption in India. Current duty anomalies, where raw materials and components attract higher taxes than finished products, are increasing production costs and weakening the competitiveness of domestic EV manufacturers.
An inverted duty structure discourages local manufacturing by making imports of fully built units or semi-knocked-down kits more cost-effective than producing vehicles domestically. This imbalance undermines policy efforts aimed at promoting “Make in India” and limits the growth of a robust domestic EV supply chain.
EV manufacturers argue that high duties on essential components such as battery cells, power electronics, and electric drivetrains significantly inflate production costs. As batteries account for a substantial portion of an EV’s total cost, higher duties directly impact vehicle pricing and reduce affordability for consumers.
The industry believes that rationalizing duties would enable manufacturers to scale production, achieve economies of scale, and invest more confidently in local manufacturing facilities. Lower input costs could translate into competitively priced electric vehicles, encouraging wider consumer adoption across passenger and commercial segments.
Correcting duty structures is also seen as vital for strengthening domestic value addition. A more balanced tariff regime would incentivize component manufacturers to set up operations in India, creating an integrated EV ecosystem that supports innovation, skill development, and employment generation.
Industry stakeholders further note that predictable and supportive duty policies are essential to attract long-term investments. Global EV players evaluating India as a manufacturing hub consider tariff stability and cost competitiveness as key decision factors, particularly in comparison with other emerging markets.
From a consumer perspective, rationalized duties could help bridge the price gap between electric and internal combustion engine vehicles. More affordable EVs would accelerate adoption, reduce dependence on fossil fuels, and contribute to lower emissions in urban transport systems.
The correction of inverted duty structures is also aligned with India’s broader energy transition objectives. Faster EV penetration would increase electricity demand from clean sources, support grid decarbonization efforts, and reduce oil imports, strengthening overall energy security.
Overall, industry voices suggest that addressing inverted duty structures is not merely a fiscal adjustment but a strategic reform. By enabling cost-effective manufacturing and accelerating electrification, such corrections could play a decisive role in shaping India’s electric mobility future.
