How GST on EVs Can Give an Impetus to Electric Mobility in India?

Vehicular pollution is spotted by the Government as one of the critical areas that needs immediate action. And this is the reason why Modi Government is emphasizing on electric mobility, starting with automobile brands in India. They have been instructed to launch electric variants of the car they are already selling. Infact, Maruti Suzuki is launching an electric vehicle next year. Hyundai has already taken a lead with its Kona SUV, but it’s too expensive. To facilitate electric mobility in India, electric vehicles (EVs) should be available at a price lower than diesel and petrol variants. So the government has reduced the GST on EVs from 12% to 5% to strengthen the electric mobility revolution. Let’s see how a cut in GST is giving impetus to businesses and people to shift towards electric mobility options.

Tax Benefits to Buyers: For making electric vehicles more affordable to the buyers, the government is providing them Income tax benefits. On the interest paid by buyers on the loan taken for EV purchases, an additional income-tax deduction of INR 1.5 lakh will be provided by the government. This results in a total benefits of over INR 2.5 lakh during the loan period to the EV buyers.

Boost to Electric Mobility Infrastructure: For full-fledged operation of electric vehicles, a robust infrastructure is also required. The government has focussed on this need by cutting the GST on EVs charging stations and chargers from an earlier 12% to 5%. This is an encouragement for businesses to join the electric vehicle movement by manufacturing power chargers and installing more charging stations in every nook and corner.  Finance Minister also announced exemptions from custom duties on lithium-ion cells to reduce their cost as these batteries are not manufactured in India yet.
Impetus to Manufacturers: Since the GST on EVs has been reduced by a great margin, it’ll be easier for both four-wheeler and two-wheeler makers to produce electric vehicles on a large scale at cheaper costs. Recently, Audi has announced the launch of e-tron EV in the year 2019-2020. Several other brands, like Hyundai, Maruti, Tata Motors and more, have big plans for India since the announcement of rate cuts made by the Finance Minister Nirmala Sitharaman.

Everyone has lauded the GST Council for walking the talk, as this is not only good from a business and economic point of view, but also from an environmental perspective. India’s air will be much cleaner as a result of this initiative, providing a healthy atmosphere to millions.  

What does the Future look like for Electric Mobility?

With all the vehicular pollution reaching insurmountable levels, unfortunately, the future is grim for the automobiles that run on petrol. India’s policy think tank, Niti Ayog, has prepared a roadmap which predicts that by 2020 India will be all electric. And now with the GST on EVs happening, that day isn’t too far. At this point of time, EVs are not so much in demand because right now their cost is very high as India doesn’t have domestic manufacturing capabilities. So the rate cut on EVs will attract foreign investment, which will help set up manufacturing units in India. This will eventually bring the cost of electric vehicles down, making it affordable for the Indian populace. So the future is bright for EVs.