Sulajja Firodia Motwani, Chair of FICCI’s Electric Vehicle Committee, has called on the government to lower GST rates on EV batteries and charging services to make electric mobility more affordable and competitive. Addressing the FICCI National Conference on EVs, she highlighted the need for swift policy changes to boost the growth in the sector.
Although the GST Council reduced the tax on lithium-ion batteries from 18% to 5% in 2022, industry leaders are demanding further cuts to support advancements in energy storage and e-mobility. Meanwhile, EV charging services continue to be taxed at 18%.
Resolving GST Imbalances to Make EVs More Affordable
Motwani pointed out the inconsistency in GST rates, noting that while EVs are taxed at 5%, replacement batteries face an 18% rate. She urged policymakers to equalize the GST for batteries and charging services to match the lower rate, 5% applied to EVs.
She argued that this adjustment would reduce costs for consumers, encourage greater adoption, and make EVs more competitive. Critical components like charging stations and batteries, she emphasized, need to become more affordable to sustain industry momentum.
Implementing the PM E-Drive Scheme
Motwani also proposed revising the PM E-Drive scheme, suggesting that it must be backed to expand to accommodate the rising demand for EVs. She recommended increasing financial incentives to ensure more vehicles qualify for benefits over the next two years.
Launched on October 1, 2024, the PM E-Drive program, The PM Electric Drive Revolution in Innovative Vehicle Enhancement, aims to promote EV adoption nationwide. Backed by a Rs. 10,900 crore allocation for two years, the initiative focuses on expanding EV use and establishing required charging stations, aligning with India’s sustainability goals.
EVs Priority Sector Lending
Motwani further advised classifying EVs under priority sector lending. She explained that this move would make financing more accessible, enabling a broader demographic, including the middle class to purchase EVs.
Upcoming GST Council Meeting
The 55th GST Council meeting, which will held on December 21, 2024, in Jaisalmer, is expected to focus on tax relief for health and life insurance premiums, with potential discussions on reduced GST rates. It is also expected that the gathering will also discuss on rate rationalization for essential goods like bottled drinking water and student notebooks from 12% to 5%.
While relief for the EV sector is unlikely at this session, reports suggest that the council may revisit taxation policies on batteries and charging services soon to foster growth in the e-mobility space.
