On July 27, Congress MP for Thiruvananthapuram, Shashi Tharoor, tried to advise the central government about the high customs duty on import of electronic vehicles. He said, “Instead of slapping high customs duty on Tesla and Hyundai’s EV cars, we should invite them to start production in India w/mandatory 60-70% localisation of automotive parts from Indian vendors. This will help a lot of Indian MSMEs and generate employment, plus help meet climate goals.”
Instead of slapping high customs duty on Tesla & Hyundai’s EV cars, we should invite them to start production in India w/mandatory 60-70% localisation of automotive parts from Indian vendors. This will help a lot of Indian MSMEs& generate employment, plus help meet climate goals. https://t.co/r1txKGtbeC— Shashi Tharoor (@ShashiTharoor) July 27, 2021
Tharoor had quoted Elon Musk’s July 24 tweet where he had talked about high import duties in India.
From union strikes to harassment: Kerala model
It is interesting to see the advice coming from an MP whose state is accused of harassing business owners. In June last week, the second-largest kids’ apparel manufacturer in the world, Kitex Group, which is also the largest private-sector employer in Kerala, announced the withdrawal of an Rs 3,500 crore investment project from the state. Kitex Group alleged that the state authorities are running a witch-hunt against the company. Notably, Kerala ranks 28 in ease of doing business while Uttar Pradesh ranks 2.
Though the company had already started acquiring land for the upcoming projects, Sabu M Jacob, chairman and managing director of Kitex group, said that the decision to scrap the project had been taken as he was fed up with the continuous harassment at the hands of the authorities. “Whoever invests in Kerala will lose peace of mind and will be driven to suicide,” he had added.
On July 9, it was reported that a delegation of Kitex flew to Telangana in a special flight sent by the Telangana government to discuss possibilities of shifting the 3,500 crore project to the state. Sabu had said, “We have already had one round of discussions with Telangana Industry Minister KT Rama Rao. They have offered excellent facilities and support for the Rs 3,500 crore project, which we have abandoned in Kerala. Telangana has invited us following our announcement to cancel the apparel project in Kerala.”
Telangana was one of the many states who had sent a formal invite to Kitex Group to look for possibilities to shift business to their state. As a matter of fact, Congress’s star leader Rahul Gandhi is also an MP from Kerala. He fought the Lok Sabha election from two seats, Wayanad, Kerala and Amethi, UP. He lost his long-held seat of Amethi to BJP’s Smriti Irani.
This is not it. Kerala has also been known for frequent union strikes. A January 11 2019 report in Firstpost states how the hartal (strikes) is the default mode in Kerala as just in first 11 days, the state had lost 3 days to strikes. In 2018, the state had lost as high as 97 working days because of strikes. In 2017, the state had witnessed 98 strikes. A study by Confederation of Indian Industries’ Kerala branch had stated that the state lost approximately Rs 1,500 crore due to strikes.
Why import duty is high on EVs in India
One of the main reason behind high import duties on electronic vehicles is to discourage such imports. The government of India encourages such companies to set up manufacturing plants in India. Such plants in India play a vital role in generating jobs and boosting the economy.
It has to be noted that GST on Electronic Vehicles in India is much lesser compared to Petrol and Diesel vehicles. In India, if someone buys an EV, a GST of 5% would be applicable on the price, while on Petrol or Diesel vehicles, GST of 28% or higher is applicable. The GST on EVs was reduced from 12% to 5% in 2019. Recently, the Union Government also proposed to exempt EVs from Road Registration Tax.