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Government working on GST reduction on EV Batteries

The government is working on a production linked incentive scheme (PLI) for automobile manufacturing and components, and also reducing GST on batteries for electric vehicles (EVs).

Speaking at the ACMA’s 60th annual session titled ‘Shaping the New Normal’, Mr. Amitabh Kant, CEO, NITI Aayog said, “The government is at a very advanced stage for scrappage incentives. They will be meeting soon…we are working on the reduction of GST of batteries to 5 per cent from 18 per cent (on lithium-ion) to promote the electric mobility,” Kant said.

While the electric vehicles attract GST of only 5 percent, the batteries which are sold separately attract GST of 28 percent on lead-acid and 18 percent on a lithium-ion battery.

“India must look at using the first-mover advantage for producing all components for electric vehicles, thus driving towards the path of being a future global leader. The electric vehicles battery prices are set to go below $100, throwing a huge opportunity in the sector to localize. Moreover, we also need to reskill our existing workforce with information related to electronics and digitization,” he said.