Production and demand of electric vehicles will increase
The purpose of giving such a huge concession on GST by the Government of India is to further increase the production and demand of electric vehicles in the country. The Indian Finance Ministry said in the statement that the decision to cut the GST rate was taken by the GST Council last month. EV manufacturers and by extension Indian customers will get the benefit of reduction in EV battery tax. The battery pack of an electric vehicle accounts for up to 50 percent of its cost.
The government has already taken the decision to reduce tax
Let us tell you that the government of the country has not taken this decision to cut GST for the first time. Yes, this is the second time that the Government of India is reducing the GST rate in the last 4 years. In 2018, it was reduced from 28 per cent to 18 per cent. This would have provided an incentive for EV manufacturers to set up shop in India. India has seen growth in both manufacturing and sales of electric vehicles in the last two years. This decision will further boost the market for renewable energy vehicles and lower carbon footprint. The trickle-down benefits of this decision could drive capacity and demand in the EV ecosystem in India.