The auto industry on Saturday welcomed the reduction in GST on electric vehicles (EVs) and chargers, saying it will help in creating an ecosystem that will encourage faster mass adoption of eco-friendly mobility.
While terming the step as yet another bold move, the manufacturers, specially electric two-wheeler makers, sought similar reduction of 18 per cent GST on spare batteries, claiming it would help maintain low running cost of EVs over their lifetime.
"We welcome the GST Council's historic decision to reduce the GST on electric vehicles from 12 per cent to 5 per cent and on EV chargers from 18 per cent to 5 per cent.
"The tax benefit will help create an ecosystem that will encourage faster mass adoption of EVs in our society," Hyundai Motor India Ltd (HMIL) MD and CEO S S Kim said in a statement.
The company had recently launched its full electric SUV Kona priced at Rs 25.3 lakh.
"We are thankful to government of India for fulfilling their promise as this strategic decision by GST Council will further strengthen confidence of prospective buyers for electric mobility in future," he added.
Expressing similar sentiments, Mahindra & Mahindra Managing Director Pawan Goenka tweeted, "One more bold enabling step by GoI (government of India) to support EV movement. With the GST rates coming down the financial viability for 3W and even 4W for shared mobility becomes positive. Now let us just do it."
Society of Manufacturers of Electric Vehicles (SMEV) also hailed the development, saying it is in line with the government's steps to promote the eco-friendly mobility, even as it sought a similar cut in spare batteries.
SMEV Director General Sohinder Gill said with the reduction in GST, the gap between prices of EVs and internal combustion engine vehicles will also be reduced and will thus play a part in faster adoption of electric mobility.
"We welcome the 7 per cent reduction in GST as it will reduce the gap between the EVs and the IC Engine vehicles," Gill said adding, if FAME II was a dampener, the GST reduction is certainly a bright spot in the national EV policy.
"The EV industry now awaits the corresponding reduction of the 18% GST in the spares batteries as it will help maintain the low running cost of EVs over their lifetime," he added.
Lohia Auto Industries CEO Ayush Lohia said the GST reduction was a long-pending demand by the industry and "hopefully it will attract investment for manufacturer and ensure clean energy over the time".
"This decision will represent the next generation in sustainable mobility and make them an attractive alternative to consumers... We propose a more cautious, clear and realistic road map towards the adoption of EVs and hope more positive steps will be taken by government to cheer up the overall industry and consumer both," he added.
Audi India Head Rahil Ansari said the GST reduction will definitely going to give a boost to EVs in India and "we are confident that that it will motivate customers looking for both entry-level EVs as well as luxury EVs that will enter the market. We are pleased that this coincides with our plans for introducing the Audi e-tron in India by the end of this year".
He, however, added, "While these are great steps for the future, short-term measures supporting the overall industry, also the luxury segment, are required by the government. All players are struggling with declining sales which in turn is leading to production cuts and may lead to job losses, too."
"The draft notification on hiking registration for ICE vehicles is detrimental to the overall development. It's high time that short term actions are being taken by the Government to help the industry overcome this phase and contribute in the long run. We need support not penalties," he said.
Ather Energy CEO and founder Tarun Mehta said the decision of the GST Council to reduce tax on EVs and chargers reduces upfront cost of buying a vehicle by Rs 8,000-10,000.
He, however, said along with EVs and chargers, GST reduction on using public charging network should have also been considered as even though the company offers free charging for all electric two-wheelers and four-wheelers, consumers will have to begin paying 18 per cent GST in the coming months.
"Offering preferential electricity rates along with a lowered GST rate, will make owning EVs more affordable and will increase adoption," Mehta said, adding that the government must also review the current taxation framework applicable on raw materials and the final product.