India needs to look at taxation on batteries and charging services for electric vehicles, Tarun Kapoor, Prime Minister Narendra Modi’s adviser, said on Tuesday.
Taxation concerns on batteries for four-wheelers and charging stations have been flagged to the relevant authorities, Kapoor said at an event in New Delhi.
“Government support for four-wheelers remains strong, but certain areas require attention. While GST on EVs is already lower, there’s a need to examine taxation on batteries and charging services, where GST is higher. This concern has been flagged to the relevant authorities,” Kapoor was quoted as saying by Business Today.
FICCI seeks GST cuts on EV batteries, charging services to boost affordability
The Federation of Indian Chambers of Commerce and Industry (FICCI) has demanded reduction GST on batteries and charging services to keep EVs competitive. Speaking at the sidelines of FICCI National Conference on EVs, FICCI Electric Vehicle Committee Chair Sulajja Firodia Motwani exhorted the need to enhance PM E-Drive corpus to support enhanced sales of EVs.
“We would be making a recommendation to the GST council to rationalise the GST taxation on EV-related areas,” Motwani said.
Elaborating on the demands, she noted, “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.”
Secondly, the GST on batteries should also come down to 5 per cent, she added.
“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 said.
Meeting that these two reforms on GST will help a lot in making EVs more competitive for the consumers, she stated.
While welcoming the PM E-Drive scheme, Motwani said that with rising demand there is a need to review the incentive amounts.
“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,” she stated.
She further said, “We do believe that PM E-Drive has great potential, and it will go a long way in further accelerating electric mobility.”
Motwani also emphasised that EVs should be part of priority sector lending.
“We do believe there’s a strong case to allow and to help having affordable financing for EVs that can make it more cost competitive for not just the classes, but for the masses,” she said.
FICCI President and Mahindra Group MD and CEO Anish Shah said electric four-wheelers currently have a 1.5 per cent penetration in India which indicates that “much work is needed”.
India has a history of leapfrogging other countries and the discussion shifts to the requirements for achieving this with EVs, he said.
The first requirement is a product that is appealing to consumers, he added.
Manufacturers in India are developing Born Electric products which will help in adoption of EVs, Shah noted.
Mahindra will launch its grounds up new electric product range later this month, he said.
“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,” Shah stated.
