Budget 2020 increased already-high tariffs on imported electric vehicles, in all forms:
The customs duty on completely built units of electric commercial vehicles have been increased from 25% to 40%, whereas the one with the internal combustion engine has been increased from 30% to 40%. The tax on semi-knocked down forms of an electric passenger vehicle, three-wheeler has been increased from 15% to 30%, whereas semi-knocked down electric, buses, trucks and two-wheelers has been raised from 15% to 25%.
“Government hikes duty on import of electric vehicles by 5-15%”, The Economic Times, Feb 2020
This is of course protection, to incentivise domestic manufacturers of EVs. I am reading Reset by Subramanian Swamy, who describes the effect of decades of such protectionism by successive Indian governments during the twentieth century:
…we sought to produce everything that we could, and the items that we could not, we strived to produce sometime in the future through an enforced programme of import substitution.
In such an environment,
… even if the market was small, there was practically a guarantee of making profits, for the price was fixed on a cost-plus basis, and the unequal distribution of income ensured enough buyers to make the production beat the break-even point… what we lost was the price and quality that could have come from competition, and therefore the tax-paying consumer became the ultimate loser.
The policy has had one part of its desired effect: Elon Musk of Tesla has declared that duties make it impractical to launch in India:
But as the book describes, it is extremely unlikely that being protected from Tesla and other world-class EV manufacturers is going to allow domestic car companies to create even better vehicles. If and when tariffs are loosened, customers will choose with their wallets. These tariffs will only delay the inevitable.