EV maker Ola opposes auto firms' plea to reduce duty on traction motors

Electric two-wheeler maker Ola Electric has struck a divergent note with the auto industry, which has appealed to the government to cut the basic Customs duty (BCD) on traction motors by half due to the ongoing export restrictions placed by China on standalone magnets. 

While the industry has asked the ministry of heavy industries (MHI) to reduce the basic customs duty on traction motors to 7.5 per cent from the current 15 per cent, Ola has opposed the move saying that “there is no global supply chain crises in electric magnets in the auto sector”. 

The Bengaluru-based firm has reasoned that it was not in favour of any reduction in duty as this would have an adverse impact on those companies which are making the motors in India, and only importing the rare earth motors (like them). 

The industry, represented by the Society of Indian Automobile Manufacturers (Siam), has however, said that they have made the request because due to the restrictions on import of standalone magnets (which had a duty of 7.5 per cent) from China, full assembly and sub-assemblies will have to be imported at 15 per cent which would lead to the increase in the cost of the vehicle.

When contacted, Ola Electric declined to comment on the issue.  

The company has argued that it has procured stocks of rare earth magnets from alternative non-Chinese sources in South East Asia and Europe and also plans to introduce “ferrite motor” powered vehicles by Q3 of 2026, which are as efficient as rare earth powered motors. So they have already worked out an alternate plan of action. 

 

In its communication with the MHI, the industry has also sought exemption for traction and wheel rim hub mounted motors which were to be manufactured in the country under the phased manufacturing program for eligibility in the PM e-drive subsidy scheme.

That apart, they have also asked for exemption from another condition to get subsidy, that import of PMP components and all other components for electric-2 and 3 wheelers from a single supplier should not be permitted.   

In the case of PLI, it has requested that additional import costs in sourcing motor assemblies, sub-assemblies, components and electronic throttle will be exempted from the computation of domestic value addition and the import content declared in the techno commercial audit issued before the restrictions by China was imposed will be calculated for DVA calculation.Ola has also made it clear that they are not in favour of any change in the domestic value addition norms of PLI as well as the phased manufacturing program as requested by many auto companies. 

The industry has also pointed out to MHI that while they are committed to the ‘Make in India’ vision, under the prevailing scenario there is need for the government to provide them with some flexibility to ensure the momentum of growth in EV penetration.