TL;DR
The Indian EV industry is calling for GST rate alignment on components and duty relief in the Union Budget to address the inverted duty structure, boost local manufacturing, and sustain EV adoption.
Ahead of the Union Budget, the Indian electric vehicle (EV) industry is advocating for crucial policy adjustments, including a correction to the inverted duty structure and targeted duty relief. Industry executives highlight that while EVs currently attract a 5% GST, essential components like power electronics and magnetic cores are taxed at 18%. This disparity creates a significant cost imbalance for domestic manufacturers and hinders the growth of the local EV ecosystem.
Experts, including those from Deloitte India and EY India, emphasize that aligning these GST rates and extending schemes like PM e-Drive to cover charging infrastructure would substantially strengthen India's EV sector. The current inverted duty structure leads to accumulated input tax credit and working capital strain for manufacturers. Protecting the GST advantage for EVs, encompassing charging infrastructure and battery swapping, is deemed vital to maintain affordability, stimulate investment, and accelerate India's transition to electric mobility.
