To make them more affordable as well as boost adoption across the country, the EV industry in India has renewed calls to reduce GST on electric vehicle batteries. Furthermore, the industry also expects EV charging services to be lower so as to make EVs a more attractive proposition for buyers. Currently, the GST rate on EV batteries is levied at 18 percent, wherein, the industry players want the GST rate to be reduced to 5 percent in the near future; similar rates are applied for EV charging in India.
Sulajja Firodia Motwani, Founder and CEO at Kinetic Green and Chariman at FICCI Electric Vehicle Committee, was the person who brought the proposal to reduce GST rate on EV batteries and lower charging rates was moved by during a conference held in Delhi on Tuesday.
Additionally, she also stressed upon the need to enhance the PM E-Drive fund to aid EV sales to increase across various niches. Motwani also highlighted that a formal recommendation on rationalizing GST rates on EV batteries and charging services will be moved to the GST Council for consideration.
Motwani further said that rationalization of the taxes will only help to make EVs more mainstream with more buyers, explaining the need to reduce GST rates on various EV-related aspects.
She stated, “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 further emphasized the need to review incentives offered under the PM E-Drive scheme. The Centre launched the EV-incentive scheme with an outlay of INR 10,900 crore to help boost adoption of electric vehicles in October this year. This would be an add on besides expanding Electric Vehicle charging infrastructure and development of EV manufacturing ecosystem in India.
Motwami highlighted, “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, also said that electric vehicles in India still have a very low penetration compared to other countries. He signified that electric cars currently have a penetration of 1.5 percent; hinting that there is still plenty of scope to expand EV base in the country.
He also added that it is up to the EV makers in the country to match steps with the government so as to make electric vehicles a more attractive proposition for buyers.
He noted, “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."
Also to note, Mahindra is gearing up to launch its two new electric SUVs on November 26 which is being developed under a new Born Electric Origin SUVs brand, the XEV 9e and BE 6e electric SUVs and will join the XUV400 electric SUV in its EV fleet for India.
