India proposes tax benefits for electric vehicles to promote sales

India wants electric vehicles to account for 30% of all passenger vehicle sales in India by 2030. (File/AFP)
Updated 09 July 2019
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India proposes tax benefits for electric vehicles to promote sales

  • Electric cars account for less than 1% of new vehicle sales due to a lack of charging infrastructure and the high cost of batteries
  • India, the world’s third-biggest emitter of greenhouse gases, is home to 14 of the world’s most polluted cities

MUMBAI/NEW DELHI: India proposed tax waivers on Friday on the purchase of electric vehicles and removed import taxes on some auto components to help boost sales and reduce its dependence on fossil fuels.
India, the world’s third-biggest emitter of greenhouse gases, is home to 14 of the world’s most polluted cities, including the capital New Delhi, with its toxic air claiming more than one million lives in 2017.
Finance Minister Nirmala Sitharaman, presenting the federal budget to parliament, said buyers of electric vehicles will receive an income tax deduction of 150,000 rupees ($2,189.30) on interest paid on loans taken out to them.
She added that the government will also withdraw import tariffs on some parts used to make electric vehicles.
“Considering our large consumer base, we aim to leapfrog and envision India as a global hub of manufacturing of electric vehicles,” she said in the budget speech.
While India wants electric vehicles to account for 30% of all passenger vehicle sales in India by 2030, electric cars account for less than 1% of new vehicle sales due to a lack of charging infrastructure and the high cost of batteries.
Sitharaman said the government has already proposed reducing a national goods and services tax (GST) from 12% to 5% to encourage sales. The plan is to have “mega-manufacturing plants” to make lithium storage batteries and solar electric charging infrastructure.
“The government clearly wants to create an entire ecosystem for e-mobility in the country,” said Puneet Gupta, associate director at IHS Markit.
As part of its program to cut pollution in its bustling cities, the Finance Minister also announced that it would shut down old and inefficient power plants and look for ways to increase the use of natural gas-based power.


South Korea downgrades Japan trade status as dispute deepens

Updated 53 min 32 sec ago

South Korea downgrades Japan trade status as dispute deepens

  • The change comes a week after South Korea initiated a complaint to the World Trade Organization
  • The new measures in effect mean it might take up to 15 days for South Korean companies to gain approvals to export sensitive materials to Japan

SEOUL, South Korea: South Korea on Wednesday dropped Japan from a list of countries receiving fast-track approvals in trade, a reaction to Tokyo’s decision to downgrade Seoul’s trade status amid a tense diplomatic dispute.
South Korea’ trade ministry said Japan’s removal from a 29-member “white list” of nations enjoying minimum trade restrictions went into effect as Seoul rearranged its export control system covering hundreds of sensitive materials that can be used for both civilian and military purposes.
The change comes a week after South Korea initiated a complaint to the World Trade Organization over a separate Japanese move to tighten export controls on key chemicals South Korean companies use to manufacture semiconductors and displays.
Seoul has accused Tokyo of weaponizing trade to retaliate against South Korean court rulings ordering Japanese companies to offer reparations to South Koreans forced into labor during World War II. Tokyo’s measures struck a nerve in South Korea, where many still resent Japan’s brutal colonial rule from 1910 to 1945.
According to South Korean trade ministry, the new measures in effect mean it might take up to 15 days for South Korean companies to gain approvals to export sensitive materials to Japan, compared to the five days or less it took under a simpler inspection process provided for favored trade partners.
Lee Ho-hyeon, a South Korean trade ministry official, said the change would affect about 100 local firms that export items such as telecommunications security equipment, semiconductor materials and chemical products to Japan. He said Seoul will work to minimize disruption to South Korean companies.
Japan for decades has enjoyed a huge trade surplus with South Korea, an economy that’s much more dependent on exports. Many major manufacturers heavily rely on parts and materials imported from Japan.
But the dispute is taking a toll. Exports to South Korea from Japan fell 9.4% last month, Japan’s Finance Ministry reported Wednesday.
The trade dispute between the neighbors erupted in July, when Japan imposed tighter export controls on three chemicals South Korean companies use to produce semiconductors and displays for smartphones and TVs, major export items for South Korea. It cited unspecified security concerns over Seoul’s export controls.
A few weeks later, Japan dropped South Korea from its own trade “white list,” triggered a full-blown diplomatic dispute that took relations between the US allies to their worst in decades.
The dispute has spilled over to security issues, with Seoul declaring it plans to terminate a bilateral military intelligence-sharing pact with Japan that symbolized the countries’ three-way security cooperation with the United States in the face of North Korea’s nuclear threat and China’s growing influence.
Following an angry reaction from Washington, Seoul later said it could reconsider its decision to end the military agreement, which remains in effect until November, if Japan relists South Korea as a favored trade partner.
Seoul announced its plans to downgrade Tokyo’s trade status in August before holding a 20-day period to gather opinions on the decision, during which the Japanese government voiced opposition to the move it described as “arbitrary and retaliatory,” Lee said.
He said Seoul needs to strengthen controls on shipments to a country that’s “hard to cooperate with” and fails to uphold “basic international principles” while managing export controls on sensitive materials.
South Korea previously divided its trade partners into two groups in managing export controls on sensitive materials. Following Wednesday’s change, South Korea now has an in-between bracket where it placed only Japan, which would mostly receive the same treatment in trade as the non-favored nations in what had been the second group.