India could see an influx of cheap electric vehicles (EVs) from China as Western countries raise trade barriers against Chinese products, according to a report by the Global Trade Research Initiative (GTRI). With 80 per cent of an EV’s cost attributed to batteries and components produced by China, India's dependence on Chinese suppliers for the EV manufacturing sector is significant, the report noted.
In May 2024, the US raised tariffs on Chinese EVs from 25 per cent to 100 per cent. The European Union (EU) followed suit, revealing plans to impose additional duties on Chinese EVs, while Canada raised tariffs by 100 per cent. Furthermore, Canada imposed a 25 per cent duty on Chinese imports of steel and aluminium.
Despite these developments, India has allowed major Chinese EV, passenger, and commercial vehicle manufacturers to operate domestically. Chinese EVs are expected to flood the Indian market in the coming years, with the partnership between China's SAIC Motor (owner of the MG brand) and India’s JSW Group aiming to sell over one million new energy vehicles by 2030. This joint venture could replicate the success of Maruti Suzuki, potentially leading to one in three EVs on Indian roads being manufactured by Chinese firms, either independently or through collaborations with Indian companies.
Like many ASEAN nations, India has reduced import duties on EVs from 70-100 per cent to 15 per cent for vehicles with a cost, insurance, and freight (CIF) value of USD 35,000 and above. This concessional duty applies to original equipment manufacturers (OEMs) that commit to investing at least USD 500 million in local manufacturing within three years. Eligible OEMs can import up to 40,000 vehicles over a five-year period. While the initiative aims to attract investment and technology transfer, it also opens the door for Chinese companies to benefit from these incentives.
The GTRI report also recommended that India invest in research and development for advanced battery technologies such as solid-state batteries and hydrogen fuel cells. It urged the country to develop a robust battery recycling infrastructure and support clean energy sources for EV charging stations.
To mitigate the environmental impact of EV production, GTRI advised strengthening environmental regulations related to EV manufacturing and disposal. Additionally, it emphasised the need to accelerate the shift to a cleaner energy mix by adopting renewable sources such as solar and wind power, thereby reducing the carbon footprint of charging EVs.
