FICCI electric vehicle chief calls for tax cuts on batteries, charging services to boost affordability

Sulajja Firodia Motwani, chairperson of the Electic Vehicle Committee at the Federation of Indian Chambers of Commerce & Industry (FICCI), said Tuesday that reducing the Goods and Service Tax (GST) on EV batteries and charging services is crucial for keeping electric vehicles (EV) competitive in the market.

“We would be making a recommendation to the GST council to rationalise the GST taxation on EV-related areas,” Motwani said on the sidelines of the FICCI National Conference on EVs on November 19, as per PTI. 

Motwani said the current GST on charging services is 18 per cent, and she called for it to be reduced to 5 per cent. Similarly, she suggested lowering GST on batteries from 18 per cent to 5 per cent.

“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,” said Motwani. The two GST reforms will help make EVs more competitive for consumers, she said.

At the conference, the chairperson also highlighted the need to increase the PM E-Drive corpus for “further accelerating electric mobility.” 

Motwani welcomed the PM E-Drive scheme but called for a review of the incentive amount.

“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,” said the chairperson.

“We do believe that PM E-Drive has great potential, and it will go a long way in further accelerating electric mobility,” she said.

Motwani also said electric vehicles should be part of the 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.” 

Anish Shah, president of FICCI and MD and CEO of the Mahindra Group, said that electric four-wheelers currently have a 1.5 per cent penetration in the Indian market, indicating that “much work is needed.”  

Shah added that for India to leapfrog other countries in EV adoption, the first requirement is a consumer-friendly product. 

Mahindra will launch its 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,” said Shah as per the news agency.