Balancing the Scales: GST Reforms for India's EV Revolution

Ahead of the Union Budget, industry players stress the need to rectify inverted duty structures and maintain GST advantages for electric vehicles. Key components face higher GST rates, causing cost imbalances. Aligning GST, broadening government schemes, and providing steady policy support are essential for EV adoption.

Ahead of the Union Budget, industry leaders call for critical reforms in the GST structure affecting electric vehicles (EVs). They emphasize the need to correct inverted duty structures and retain the GST advantage for EVs, including for charging infrastructure and battery swapping, to ensure competitive pricing against internal combustion engine (ICE) vehicles.

Currently, while the GST on EVs and chargers stands at 5%, many vital components like power electronics face an 18% tax rate, causing imbalances for domestic manufacturers. Zenergize Co-founder & CEO Navneet Daga and Deloitte India's Rajat Mahajan highlight that this disparity strains working capital and leads to accumulated input tax credits.

Industry advocates argue for aligning GST rates, broadening governmental schemes, and maintaining demand incentives to boost EV penetration, target 30% by 2030. Notably, EY's Saurabh Agarwal urges duty exemptions on critical inputs to continue until local cell manufacturing scales under the PLI scheme to sustain momentum in uncertain global trade conditions.

(With inputs from agencies.)