Electric vehicle prices set to drop as government cuts GST on batteries


In evidence of a new impetus for the domestic electric vehicle industry, the Indian government recently reduced the GST on lithium-ion batteries from 18% to 5%; giving rise to a wide possibility of Indian EVs at a much lower cost, as 50% of the cost of the EV comes from the price of its battery.

“Electric vehicles, whether or not equipped with a battery, are eligible for the preferential GST rate of 5%,” the Ministry of Finance statement said.

The decision to lower GST rate on lithium-ion batteries from 18% to 5% was recently taken at the 47th GST Council meeting in Chandigarh. The council meeting was chaired by Finance Minister Nirmala Sitharaman.

It should be noted here that the government previously reduced the GST from 28% to 18% on lithium-ion batteries in 2018. This is the second instance where the GST Board has lowered the rate of the tax.

The Indian electric vehicle industry has seen several unfortunate cases where several electric scooters have caught fire and injured people. Currently, the government has set up a commission to investigate the matter.

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And recently, a group of experts said that such cases have occurred due to poor quality electric vehicle batteries. Therefore, lowering the GST on such batteries from 18% to 5% is a welcome step, which will further boost the adoption of electric vehicles in the country, several industry observers believe.

The drop in the GST rate has been widely welcomed by India’s EV startup community. Speaking to IANS news agency, Akshit Bansal, CEO of electric vehicle (EV) charging network provider Statiq said: “This move will encourage the industry to pass on more cost benefits to users. and will also provide a much-needed boost to people who are still looking for incentives to adapt to the electric vehicle lifestyle.

This announcement comes against the backdrop of NITI Ayog CEO Amitabh Kant hinted that the government was working in the same direction to lower the GST on electric vehicle batteries.

Separately, in a separate development, the government has reportedly asked original equipment manufacturers (OEMs), including Ola Electric, Okinawa Autotech, Pure EV and others, to share the reasons behind recent fires with their vehicles. electric two-wheelers.

The government has asked these companies to respond on why they should not be penalized for such incidents caused by faulty batteries. OEM players have 30 days until the end of July to respond. The time period, however, can be extended as needed.

For the uninitiated, seeing a number of e-scooters catch fire recently, the government had assured several measures, including asking e-vehicle manufacturers to recall faulty products.

In addition, the Bureau of Indian Standards (BIS) recently released the “Performance Standards for Electronic Vehicle Batteries”. The standards agency is also in the process of specifying two different standards for batteries in various passenger and commercial vehicles.

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