EV makers want GST cut on electric vehicle batteries and lower charging rates

EV industry in India has renewed call to reduce GST on electric vehicle batteries to make them more affordable as well as boost adoption across the country. The industry also wants EV charging services to be lower in an effort to make EVs a more attractive proposition for buyers. The GST rate on EV batteries are currently levied at 18 per cent. The industry wants the GST rate to be reduced to 5 per cent in near future. Similar rates are applied for EV charging in India.

The proposal to reduce GST rate on EV batteries and lower charging rates was moved by Sulajja Firodia Motwani, Founder and CEO at Kinetic Green and FICCI Electric Vehicle Committee Chair, during a conference held in Delhi on Tuesday. She also stressed upon the need to enhance PM E-Drive fund to help EV sales to increase across segments. Motwani also said that a formal recommendation on rationalising GST rates on EV batteries and charging services will be moved to the GST Council to consider.

Explaining the need to reduce GST rates on various EV-related aspects, Motwani said that rationalisation of the taxes will only help to make EVs more mainstream with more buyers. She said, “Currently the GST on charging services is still 18 per cent which we would request to bring down to 5 per cent so that charging becomes more affordable to the consumers. While EVs attract a GST of 5 per cent, GST on batteries is 18 per cent. The request is to reduce it to 5 per cent so that when consumers buy replacement batteries, it is more affordable."

Motwani also emphasised the need to review incentives offered under the PM E-Drive scheme. In October this year, the Centre launched the EV-incentive scheme with an outlay of ₹10,900 crore to help boost adoption of electric vehicles besides expand EV charging infrastructure and development of EV manufacturing ecosystem in India. Motwami said, “We believe that because the demand is growing, perhaps the incentive amounts have to be reviewed so that the budget under the PM E-Drive scheme overall is enhanced to ensure that the total number of vehicles sold in the next two years are eligible for the incentive."

Anish Shah, MD and CEO at Mahindra and President at FICCI, said that electric vehicles in India still has very low penetration compared to other countries. He said electric cars currently have a penetration of 1.5 per cent hinting that there is plenty of scope to expand EV base in the country. He also said it is up to the EV makers in the country to match steps with government to make electric vehicles a more attractive proposition for buyers. He said, “While OEMs (original equipment manufacturers) always like asking for subsidies, what we would say is the government has done everything it has to do...it is now up to the industry to now take this forward and enable the transition to electric."

Mahindra is gearing up to launch two new electric SUVs on November 26. Being developed under a new Born Electric Origin SUVs brand, the XEV 9e and BE 6e electric SUVs will be join the XUV400 electric SUV in its EV fleet for India.

EV sales in India

EV sales in India has been on a growth trajectory, a contrary to most other markets where EV sales have declined in recent months. In the first half of this year, EV sales in India grew by up to 19 per cent compared to the same period in 2023. It now aims to breach the one million sales milestone in a calender year. HD Kumaraswamy, Union Minister for Heavy Industries, said that the Centre aims to achieve around 30 per cent of the overall vehicle sales to come from electric vehicles by the end of this decade.

Check out Upcoming EV Cars in India, Upcoming EV Bikes in India.