The Indian electric vehicle (EV) industry is urging the government to lower the Goods and Services Tax (GST) on lithium-ion batteries in order to expedite the adoption of EVs in the country. While the GST Council has not mandated a tax reduction on EV batteries, industry insiders remain optimistic about the growth prospects of the sector.
Stakeholders argue that a reduction in battery taxes would facilitate the shift to a more environmentally friendly and sustainable transportation ecosystem in India. They believe that lower taxes would encourage consumers to embrace electric vehicles wholeheartedly and would provide support for swapping stations, promoting the widespread adoption of this concept.
However, the GST Council’s fitment committee recently declined the industry’s proposal to reduce the tax on EV batteries. The committee contends that distinguishing among various applications of lithium-ion batteries, including EVs, for tax purposes would be impractical.
Despite the refusal of the GST Council, industry players are confident that the absence of a tax reduction will not harm consumer sentiment. They believe that the government should consistently assess the significance of the EV industry for the nation’s sustainable future and endorse policies and initiatives that promote the widespread adoption of electric vehicles.
The government, on the other hand, maintains its commitment to promote indigenous production and self-reliance in the EV sector. The Union Road Transport Minister anticipates a significant surge in EV sales, resulting in a substantial long-term reduction in battery prices. The government also highlights the potential of utilizing the recently discovered lithium-ion reserves in Jammu to enhance competitiveness.
In addition to lithium-ion batteries, the government believes that other successful technologies such as sodium-ion and aluminum-ion can be explored in the EV industry. The ultimate goal is to establish an ecosystem for battery-powered vehicles and drive the growth of the sector in India.
