In a major policy shift, the Indian government has introduced significant import duty changes auto India this July 2025, targeting both the electric vehicle (EV) sector and the internal combustion (IC) engine market. The Ministry of Finance, in collaboration with the Ministry of Heavy Industries, announced a car parts duty revision to promote domestic manufacturing while addressing supply chain bottlenecks faced by OEMs and EV startups.
The new tariff structure slashes duties on select EV battery modules and electronic controllers, while increasing import levies on IC engine crankshafts, gearboxes, and fully assembled motors. This dual approach aims to balance Make in India priorities with the urgent need to ease raw material and component sourcing for emerging EV manufacturers.
Why Import Duty Revisions Matter in 2025
India is currently at a critical juncture in its mobility transition. While EV sales are booming—with nearly 16 lakh EVs sold in the first half of 2025—local component manufacturing is still catching up. The import duty changes auto India were introduced to strike a better balance between incentivizing local production and preventing market slowdown due to part shortages.
The new car parts duty revision strategy is expected to:
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Make EVs more affordable by reducing component costs
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Discourage excessive imports of IC engine parts
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Support Tier-2 and Tier-3 Indian manufacturers
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Create competitive pricing across EV and hybrid models
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Streamline compliance with the phased localization plan (PMP)
By adjusting duties, the government ensures that domestic innovation is not penalized, while allowing crucial EV parts to be brought in at reduced rates temporarily.
Key Import Duty Revisions: EV vs IC Engine Components
To provide clarity to automakers and suppliers, the government has released a detailed tariff chart showing changes in import duty rates across categories. Here’s a summarized table for the most affected components:
| Component Type | Previous Duty Rate | Revised Duty Rate (July 2025) | Change (%) |
|---|---|---|---|
| EV Battery Modules (Li-ion) | 15% | 5% | -10% |
| Electric Drive Motor Assemblies | 10% | 7.5% | -2.5% |
| Electronic Controllers (EVs) | 12% | 6% | -6% |
| Crankshafts (IC Engines) | 7.5% | 15% | +7.5% |
| Gearboxes (IC Vehicles) | 10% | 18% | +8% |
| Fully Assembled IC Engine Units | 10% | 20% | +10% |
This mix of reduction and increment aligns with the import duty changes auto India framework to support EV adoption while gradually phasing out incentives for conventional vehicle imports.
Industry Reactions to the 2025 Policy
Automakers and component suppliers have largely welcomed the car parts duty revision, especially those invested in EV assembly. Startups like Ola Electric, Ather, and Mahindra E-Verito praised the move for easing cost burdens and speeding up production timelines. At the same time, traditional automakers are being nudged toward hybrid and electric models.
Immediate industry outcomes include:
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6–8% reduction in EV production costs for OEMs using imported battery packs
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Increased orders for domestic IC component suppliers
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Surge in demand for local contract manufacturers to replace high-cost imports
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Greater attention to export-friendly EV models targeting Southeast Asia and Africa
The revised duty structure is likely to accelerate the transition away from internal combustion technology, especially in urban transport segments.
Long-Term Impact on Local Manufacturing and Trade
The government has clearly positioned these import duty changes auto India as part of a larger vision. Over the next three years, tariffs will be further reviewed based on domestic capacity growth. The Make in India EV roadmap now includes financial incentives for setting up battery cell plants, motor factories, and electronic control units within India.
Strategic benefits include:
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Enhanced supplier confidence to scale up operations
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Faster implementation of PMP targets for key components
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Better control over pricing of electric two-wheelers and passenger EVs
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Expansion of India’s share in the global green mobility value chain
The car parts duty revision supports this transformation by ensuring duties are neither too high to hurt innovation nor too low to discourage local investment.
Conclusion
The latest import duty changes auto India announced in July 2025 signal a strong push toward self-reliance in electric mobility while offering much-needed flexibility to EV manufacturers. By revising duties on both electric and conventional auto parts, the government has struck a smart policy balance that supports economic growth, green innovation, and industrial development. As these revisions take effect, their impact will be felt across vehicle pricing, manufacturing strategies, and long-term investment decisions in India’s automotive sector.
FAQs
What are the import duty changes auto India announced in July 2025?
The government revised duties to lower tariffs on EV parts like battery modules and raised tariffs on IC engine parts to support Make in India goals.
How does the car parts duty revision affect EV pricing?
Lower duties on EV components like batteries and controllers are expected to reduce EV production costs, making them more affordable.
Which parts saw a duty increase?
Crankshafts, gearboxes, and fully assembled IC engine units now attract higher import duties under the car parts duty revision plan.
Why is the government lowering duties on EV components?
To support domestic EV assembly and address part shortages while India’s local manufacturing ecosystem continues to scale up.
Will these duty changes affect domestic suppliers?
Yes, they encourage Indian suppliers to expand operations and fill gaps left by expensive or restricted imports.
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