Kochi, Jan. 20 -- A quiet policy shift in Beijing is threatening to push up electric vehicle (EV) prices in India, just as the EV industry's tax edge over combustion engines begins to fade.

China has decided to slash an export tax rebate on lithium-ion batteries from 9% to 6% from 1 April and phase it out in a year. The 8 January decision bodes ill for Indian EV makers heavily reliant on Chinese battery makers such as BYD and CATL, and comes at a time when lithium prices have shot up over the past year.

Batteries account for over a third of an EV's total cost, and costlier prices spell a direct blow to Indian EV makers, unless they pass on the increase to customers. EV makers dependent on short-term battery purchases are expected to bea...