Tata Motors Flags 10% Import Duty ‘Anomaly’ For Electric Truck Tractors

Tata Motors has flagged what it calls an “anomaly” in India’s import duty structure for electric truck tractors, saying the current 10% basic customs duty on electric tractors for semi-trailers warrants correction as the country looks to build a locally engineered electric commercial vehicle ecosystem.

The issue has been raised with the government through the Society of Indian Automobile Manufacturers (SIAM), Tata Motors Managing Director and CEO Girish Wagh said during the company’s Q1 FY27 earnings call.

According to Wagh, the Ministry of Heavy Industries has also taken up the matter with the Ministry of Finance.

“There is one anomaly today in the duty structure wherein the electric tractors, they seem to have been missed from the duty structure and therefore they enjoy a very low import duty of 10% today,” Wagh said.

In commercial vehicle terminology, a tractor refers to the powered truck unit designed to pull a semi-trailer and not an agricultural tractor.

SIAM’s current tax and duty database lists electric tractors for semi-trailers under HS heading 8701 with a basic customs duty of 10%. The same database also lists diesel, diesel-hybrid and petrol-hybrid tractors for semi-trailers at a 10% basic customs duty.

Tata Motors did not specify during the earnings call what revised tariff it is seeking or whether it wants a differentiated duty structure specifically for electric tractor units.

“This is something which has been brought to the notice of the government and we are very thankful that MHI has already picked it up and also requested Ministry of Finance further to correct this anomaly,” Wagh said.

The comments assume significance as India’s electric commercial vehicle market begins expanding beyond small urban cargo vehicles into buses and heavier freight applications, bringing localisation of vehicles and their underlying supply chains increasingly into focus.

Local Engineering at the Centre

Wagh’s comments came in response to a question on overseas-developed electric vehicle products and platforms entering India’s commercial vehicle market and whether the industry was engaging with the government on the issue.

Tata Motors said its electric commercial vehicle range, from its smallest electric cargo vehicle to a 55-tonne tractor, has been engineered in India.

“Our EVs across the range, right from Ace Pro which is the smallest EV to a 55-ton tractor, all have been engineered completely in India,” Wagh said.

The company also said these products meet domestic value-addition requirements.

“We are fully aligned with the government’s agenda, not only pushing the electrification for decarbonisation but also in terms of establishing the supply chain in India to ensure that we build a long-term sustainable EV value chain,” Wagh said.

It was in this context that Tata Motors raised the question of the import duty applicable to electric truck tractors.

“We do look forward for correction of this anomaly because this is very important to ensure that we promote local engineering and building of vertically integrated electric vehicle value chain,” Wagh said.

The company did not identify any overseas manufacturer or imported electric truck platform while making its case, nor did it quantify the number of electric tractor units currently being imported into India.

Electric CV Adoption Begins to Broaden

The policy intervention comes as Tata Motors is seeing electric commercial vehicle adoption spread across a wider range of applications.

The company said during the quarter that it had secured more than 3,400 electric vehicle orders across freight, logistics and passenger mobility segments.

Tata Motors is also seeing EV penetration rise at the smaller end of the commercial vehicle market.

During the earnings call, Wagh said EV penetration in the company’s small commercial vehicle and pickup segment had reached close to 10%.

The shift, according to Tata Motors, is being aided partly by changes in operating economics.

Wagh said increases in diesel and CNG prices have made electric commercial vehicles relatively more attractive by bringing forward the point at which their total cost of ownership reaches parity with conventional vehicles.

“We have seen a significant increase in demand in electric vehicles, especially in the smaller electric vehicles,” he said.

The company is also seeing increasing customer engagement around electrification in light, medium and heavy commercial vehicles and expects EV penetration to improve during the second half of the financial year.

Localisation Challenge Extends to Supply Chain

Tata Motors’ call for a duty review also comes against the backdrop of continuing dependence on imported inputs in parts of India’s EV supply chain.

The company acknowledged during the same earnings call that the increase in electric vehicle demand has created bottlenecks in its EV supply chain, particularly for imported battery cells.

“We are facing a shortfall in some of the imported material, especially the cells, which is a long lead time kind of a commodity,” Wagh said.

Tata Motors said measures had been taken to address the shortage and expects the EV supply-chain bottlenecks to progressively ease towards the end of the second quarter.

The two issues highlight different aspects of India’s electric commercial vehicle localisation push: developing and manufacturing vehicles domestically while increasing the domestic content of their underlying supply chains.

For Tata Motors, the import duty applicable to electric truck tractors has now become part of that broader localisation discussion.

The company has not publicly specified the tariff level it would like to see. For now, its stated position is that the existing 10% basic customs duty needs to be revisited.

Also read: India Starts Investigation Against Chinese Electric Tractors