FICCI urges the centre to slash the GST rates further to help make batteries and related services more affordable for consumers and promote EV usage in India.
As the growth rate of electric vehicles in India intensifies to promote the affordability of electric vehicles, the chairperson of the FICCI Electric Vehicle Committee, Sulajja Firodia Motwani, called for cutting the GST on EV batteries and charging service from 18% to 5%. Motwani made this remark during the FICCI National Conference on EVs held on November 19, noting that while enhanced subsidies are critical for sustaining competitive standing for EVs on the market, corresponding tax reductions are also necessary.
Current Tax Structure
Motwani also highlighted the gaps in the GST rates that were a concern for the consumers. Where electric vehicles are levied at 5%, replacement batteries come with an 18% tax. Again, she explained, stating that matching the GST on batteries and charging services with that on EVs would drastically reduce the expenses of the consumers, hence boosting the uptake of electric mobility solutions. “These changes will make EVs more competitive in cost to the consumer,” she said, noting that one major way to do this is to reduce taxes, especially on important components such as charging infrastructure and batteries.
Reviewing Incentives
During the occasion, Motwani also urged for an assessment of the incentive quantities under the PM E-Drive scheme. She said as the use of these cars goes high, it is important to improve the current budget for this scheme to increase the coverage of such vehicles that will benefit from the financial incentives in the next one and a half years. The PM E-Drive initiative to push electric mobility in India comes with a financial outlay of ₹10700 crore for two years only. According to Motwani, increased incentives will go a long way in accelerating electric mobility in the country.
Priority Sector Lending
Apart from tax reforms, Motwani supported the prioritisation of electric vehicles in priority sector lending. This would enable catering to the financial needs of consumers and increase the uptake of EVs among people other than the rich clientele.
Industry Perspectives
Another FICCI member and president, Anish Shah, MD and CEO of Mahindra Group was on the same page with Motwani about the centrality of consumer-focused offerings in the EV segment. He was quick to add that while electric four-wheelers still have a meagre 1.5% penetration in the country, this made lots of headway possible in this market section. Shah said that Mahindra has set its electric product launch later this month and is ensuring that the industry is shifting towards electric mobility.
Future Outlook
The participants of the upcoming GST Council meeting planned for December 21 should consider various taxation problems and prospects for the EV industry. Although there are debates over the reconsideration of the tax policies on batteries, and charging services, or not, it is still unclear whether exemption will be given shortly. However, the top brass of the industry is positive that these proposed changes could spearhead a much stronger electric vehicle market in India. In conclusion, the prognosis for electric vehicle expansion in India depends only on FICCI continuing the reforms and GST incentives needed to develop this field.
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