According to FICCI Electric Vehicle Committee Chairman Sulajja Firodia Motwani, to maintain the competitiveness of electric vehicles (EVs), there is an urgent need to reduce the Goods and Services Tax (GST) on EV batteries and charging services.
Call for rationalization of GST rates for EV components
Speaking on the sidelines of the FICCI National Conference on EVs, Motwani highlighted the disparity in GST rates, saying:
EVs attract 5% GST, but batteries and charging services attract 18% tax.
“There is a request to reduce GST on batteries and charging services to 5% to make EVs more affordable for consumers,” she said.
Reducing the GST on replacement batteries, in particular, could significantly reduce costs for consumers.
Scaling up the PM e-Drive scheme
Motwani also emphasized the need to expand the corpus under the PM e-Drive scheme to accommodate the growing demand for EVs:
“With increasing sales, we recommend that the incentive amount be revisited to ensure that the scheme supports a larger number of vehicles,” she said.
She called for a review to ensure that the budget under the plan aligns with demand over the next two years.
Affordable financing through priority sector lending
Highlighting the importance of financing, Motwani urged policymakers to include EVs in priority sector financing:
“Affordable financing for EVs will help make them cost-competitive not just for the classes but for the masses,” she said.
Industry’s Role in Accelerating EV Adoption
FICCI President and Mahindra Group MD & CEO Anish Shah echoed the need for collective action to drive EV adoption:
With electric four-wheelers accounting for just 1.5% market penetration in India, Shah commented, “A lot of work remains to be done.”
He noted that manufacturers are working on “born electric” products designed for mass adoption and emphasized the need to appeal to EV products to drive demand.
Shah added that Mahindra will launch its new electric product range later this month. Appreciating the government for its initiatives, he said, “The government has done its part; Now it’s up to the industry to drive the transition to electric mobility.”
Discussions at the conference emphasized the need for fiscal reform, enhanced incentives and collaborative efforts between the government and industry to make EVs more accessible and competitive in India’s fast-growing market.