In Short : Industry stakeholders have stressed that correcting inverted duty structures is essential to accelerate electric vehicle adoption in India. Higher taxes on components than finished products are increasing manufacturing costs and discouraging domestic value addition. A rational duty framework could lower EV prices, boost local manufacturing, attract investments, and support faster electrification across mobility segments.
In Detail : Industry representatives have highlighted that inverted duty structures are emerging as a major bottleneck in India’s electric vehicle journey. When key components attract higher import duties than finished or semi-finished products, domestic manufacturers face cost disadvantages that weaken competitiveness and slow down large-scale electrification.
Such duty anomalies discourage local manufacturing by making imports more economically attractive than producing components or vehicles within the country. This runs counter to the broader objective of building a strong domestic EV ecosystem and limits the effectiveness of policies aimed at encouraging indigenous production.
Battery packs, battery cells, power electronics, and electric drivetrains are among the most affected components. Since batteries account for a significant share of an EV’s total cost, higher duties on inputs directly translate into higher vehicle prices, reducing affordability for end consumers.
Industry players believe that correcting these duty structures would help manufacturers achieve economies of scale. Lower input costs would enable companies to price electric vehicles more competitively, expand production volumes, and improve market penetration across two-wheelers, passenger vehicles, and commercial segments.
A rationalised duty regime would also support domestic value addition by encouraging component suppliers to invest in local manufacturing facilities. This could lead to the development of a more integrated EV supply chain, fostering technology transfer, innovation, and skill development within the country.
From an investment perspective, policy clarity on duties is considered crucial. Global and domestic investors evaluating India as an EV manufacturing hub closely track cost structures and long-term policy consistency, making duty rationalisation an important signal for sustained capital inflows.
Correcting inverted duties could also help narrow the price gap between electric vehicles and internal combustion engine vehicles. Greater price parity would accelerate consumer adoption, especially in price-sensitive segments, and support faster electrification of mass mobility.
Industry stakeholders note that faster EV adoption would bring broader benefits, including reduced oil imports, lower emissions, and improved urban air quality. Increased electricity demand from EVs would also complement renewable energy growth and support grid decarbonisation efforts.
Overall, the industry views correction of inverted duty structures as a strategic reform rather than a short-term fiscal adjustment. By improving cost competitiveness and encouraging domestic manufacturing, such changes could play a decisive role in accelerating India’s electrification and clean mobility ambitions.
