Sulajja Firodia Motwani, founder and CEO of Kinetic Green Energy and Power Solutions, and Chair of FICCI’s Electric Vehicle Committee, has called for a reduction in the Goods and Services Tax (GST) on batteries and charging infrastructure from the current 18% to 5%. This move, she argues, would make electric vehicle (EV) replacements more affordable and align the tax structure with the supportive GST regime for electric vehicles, which is currently set at 5%.
Speaking in an exclusive interview, Motwani stated, “The Government of India has provided substantial support to the EV sector by levying only 5% GST on electric vehicles, making them more affordable compared to the 28% GST on petrol and diesel vehicles. However, the 18% GST on batteries and charging infrastructure remains a significant challenge. We believe charging services should also attract 5% GST to lower costs for consumers.”
GST Disparity Creates Inefficiencies for Manufacturers
Motwani highlighted the inefficiency created by the disparity in GST rates. She explained that while EV manufacturers pay 18% GST on batteries, they charge only 5% GST on vehicles, resulting in blocked funds and requiring refunds from the government. With batteries accounting for about 50% of the cost of an electric vehicle, aligning the GST on batteries with that of vehicles would help ease cash flow issues for manufacturers, particularly startups, and reduce costs for consumers.
“We will be presenting this demand to the GST Council shortly,” Motwani added, urging the government to consider the impact of high input taxes on the EV ecosystem.
Progress and Future Goals for India’s EV Sector
Motwani praised the Indian government’s efforts to promote e-mobility, noting significant progress in the sector. “In 2021, EV penetration in India was just 0.9%. By 2024, it has reached nearly 8%, and the goal is to achieve 30% penetration by 2030. This transformative shift will require nearly all two-wheelers and three-wheelers to transition to electric. Such a move will reduce urban pollution, enhance fuel security, and position India as a global leader in e-mobility,” she said.
She stressed that the transition to electric vehicles is not only a shift in transportation but also a technological transformation that can establish India as a global producer and innovator in the sector.
Motwani also addressed the PM eDrive scheme, which aims to support the EV sector through subsidies. While she acknowledged the scheme’s positive reception, she expressed concern that the allocated budget might be insufficient to meet the growing demand. She pointed out that certain subsidy slabs for two-wheelers and three-wheelers may run out sooner than expected due to the surge in EV sales. “We will request the government to increase the budget allocation to ensure the scheme operates smoothly for the next two years as intended,” she said.
Motwani emphasized the need for comprehensive support from the Ministry of Heavy Industries to scale the sector further. Beyond incentives, she called for guidance on developing GST revisions, expanding charging infrastructure, and providing broader policy support to ensure sustained growth in the EV industry.
Motwani strongly supported the transition to 100% electric buses, citing the success of government initiatives in promoting e-buses over the past five to seven years. She noted that users report a smooth and silent experience, and the availability of charging depots within cities makes the transition feasible. Furthermore, the development of highway charging infrastructure will enable the operation of interstate electric buses.
“Shifting to electric buses will reduce pollution, noise, and transportation costs, ultimately making bus tickets cheaper for passengers. It’s a win-win for everyone,” Motwani concluded.
Motwani’s remarks underscore the critical steps needed to accelerate India’s transition to electric mobility, including tax reforms, expansion of infrastructure, and consistent government support. With these measures in place, the Indian EV sector is poised for transformative growth, contributing to sustainability and the country’s long-term economic goals.
