Elon Musk alert! India just hiked customs duty on imported electric vehicles to 40%

Elon Musk alert! India just hiked customs duty on imported electric vehicles to 40%
  • Electric vehicles are all set to get dearer thanks to increase in customs duty rates by up to 67%.
  • Elon Musk had earlier said Tesla might run on Indian roads in 2020.
  • The increase in customs duty will go into effect on April 1, 2020.
  • Apart from this, the government has increased funds allocated for the FAME – India scheme to ₹693 crore from ₹500 crore a year ago.
Elon Musk was hoping to launch Tesla in India, one of the world's big and budding markets for electric vehicles (EV).

But even before Musk could break ground in the subcontinent, the Indian government has decided to increase the basic customs duty on imported EVs to 40% from 25%.

Musk was already concerned about the regulations in India, and the latest duty hike on EVs may have made Tesla even less competitive at a time when a lot of local carmakers are joining the EV bandwagon.

Elon Musk alert! India just hiked customs duty on imported electric vehicles to 40%

The revised duties will affect electric motor vehicles used for transport of passengers and goods, and motorcyles (including scooters).


Completely Built Units (CBUs) of commercial electric vehicles25%40%
Semi Knocked Down (SKD) forms of electric passenger vehicles, three-wheelers15%30%
Semi Knocked Down (SKD) forms of electric vehicles - Bus, Trucks and two-wheelers15%25%
Completely Knocked Down (CKD) forms of electric vehicles - Passenger vehicles, Bus and Trucks, three-wheelers, two-wheelers10%15%

Essentially, electric cars and scooters will get expensive from April 1, 2020, when the revised customs duty rates go into effect.

Government increases FAME – India allocation by 39%

The Modi government today announced a 39% increase in the budget for promoting adoption of electric vehicles. The expanded budget allocation falls under the FAME – India Phase II scheme and should come as a shot in the arm for the nascent EV industry in India.

In her second budget, Nirmala Sitharaman has allocated ₹693 crore, which is a sharp increase from the ₹500 crore allocated in the previous year.


What exactly does this mean to me as a buyer of electric vehicles?

The Scheme for Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicle in India (FAME – India) is aimed at offering incentives to buyers in the form of subsidies.

Increased allocation for this scheme shows that the government is serious about promoting the use of electric vehicles.

This is especially important right now when the infrastructure and network for electric vehicles in India is still in early stages of development, leading to electric vehicles being more expensive when compared to regular petrol-powered vehicles. Earlier this year, the government had approved 2,636 new charging stations for electric vehicles.

Under the Phase 1 of the FAME – India scheme, over 2,80,000 buyers have claimed incentives on the purchase of electric vehicles. The government has disbursed almost ₹360 crore till date as incentives.

See also:

Check live Budget 2020 updates here

Government to announce new policy to encourage domestic manufacturing of mobile phones and electronic equipment

Top electric cars in India in January 2020