BMW calls for temporary import duty cuts on electric vehicles in India


The government needs to reduce import duties on electric vehicles temporarily to help generate adequate volumes for automakers to start manufacturing locally, said Vikram Pawah, President at Group India.

BMW India – which is set to re-enter the electric mobility space with the launch of three new vehicles over the next 180 days – said it is keen to produce electric vehicles in the country.

“I think what we have been asking the government is to give us a three years window, reduce duties, create demand, then we can localize. Or may be they can give us a quantity window, say for selling 10,000 vehicles or something like that. These are the things, I think, are required for faster adoption of EVs,” Pawah told ET, seconding the stance taken by American electric carmaker Tesla which has also urged the government to rationalize customs duties to help generate demand for manufacturing its products in the country.

BMW India will kickstart its product offensive in the electric vehicle space with BMW iX – which will be launched in the next 30 days. Also on card, are an all electric MINI and a sedan BMW i4.

Globally, BMW is set to introduce 25 electrified vehicles by 2023. Nearly half of these – the full electric ones – can be launched in India, said Pawah, provided the current incentives continue and adequate charging infrastructure is set up across the country.

“I think the adoption of any new technology in the premium space is much faster. Customers want the latest on offer, be it in terms of safety or environment-friendliness. I believe electric mobility will pick up strongly in the luxury segment. But for that to happen, you still need a couple of pre-conditions – a good charging network and a stable policy framework”, said Pawah.

At present, the government levies reduced GST rate of 5% on electric vehicles. The tax concession needs to be continued to encourage consumers to transition, and for automakers to plan more products for future.

As far as demand in the premium car market is concerned, Pawah said recovery has been strong post the second wave of the pandemic. “Increasing preference for personal mobility is a prime reason. People are driving down for holidays with families, as it is a safer way of travelling. Additionally, and this is a worldwide trend, post covid consumers want to spoil themselves. For all these reasons, I think that the demand we are seeing is sustainable”, informed Pawah, adding if not for the global shortage of semi-conductors the company would have even exceeded the sales target set for 2021.

BMW India’s passenger vehicle sales increased by 38.5% between January and October 2021. The company currently has pending orders of around 2000 units, and an average waiting period of eight weeks on its range of products. BMW India had reported a decline of 32% to sell 6604 units across BMW and MINI brands in the last calendar year.

The company has not faced any adverse impact on production operations due to the shortage of semi-conductors. Pawah added, “There have been some delays in delivery times for our customers due to the semi-conductor issue, container shortages and logistics challenges we are seeing across the world. But overall we have been able to secure our plan for the year. I think we are in a much better position because we planned ahead and we have a flexible manufacturing system.”

Overall, though Pawah said for the premium car market to grow meaningfully, there needs to be a rationalization of the existing tax structure. Premium vehicles account for about 1% of all passenger vehicles sold in India. If tax structures were to be rationalized, the premium car segment has the potential to increase to 5-10% of the passenger vehicle market and contribute substantially to the government’s aim to double the turnover of the automobile sector to Rs 15 lakh crore in the next five years, said Pawah.

“If some reasonable difference is created in the tax structure, you will see demand pick up. Because right now, the jump is too high for customers”, said he.

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