The high GST slab for electric vehicles in India doesn’t help government’s plan to go full electric by 2030. Therefore, The Society of Manufacturers of Electric Vehicles (SMEV), the nodal body of electric vehicle manufacturers in India, has requested the government to reduce GST rate to 5% on all-electric vehicles and electric vehicle subsystems. Presently, the electric cars are charged 12% GST.
Sohinder Gill, Corporate Affairs Director, SMEV said, “GST reduction is critical to achieve FAME targets and galvanize E-vehicle industry.”
Here’s what SMEV expects from the Government to promote electric vehicle in India
1- Launch of next phase of FAME Scheme for a longer period of 6 years and its fast implementation: Due to high ownership cost of EVs in the present scenario, the approach to Demand Incentives (DI) and Viability Gap Funding (VGF) needs to be changed and the existing subsidy module needs to be enhanced for the next 6 years as compared to the previous short-term periods i.e. 6 months – 1 year.
2- Reduction of GST to 5% on all EVs and EV subsystems
3- One-time Income tax deduction to all EV buyers: Many countries such as Norway, France, Canada, Denmark, and Netherlands have already implemented this policy in their respective systems and have garnered a plethora of benefits out of it. For example, Norway now has 36 percent of EVs on road due to such supportive policies. Similar policy can be introduced in India as well as a step to encourage faster e-vehicle adoption wherein the government need not spend money by utilizing public funds to make any transactions. It will further encourage customers to purchase more EVs in the upcoming future as well.
4- Indigenization of EV components: GST for all imports should be 5%. In addition, import duties on motors, controllers and DC-DC converters should be ZERO for the first 3 years and should be increased to 10% in YEAR Four and 20% in YEAR Six. This will allow local manufacturers room to grow.
SMEV is hoping to see these plans being announced in the coming budget.