Budget 2025: Electric Vehicle Industry Demands Tax Cuts, Infra Boost, And Stronger Incentives

The electric vehicle (EV) industry in India is urging Finance Minister Nirmala Sitharaman to implement significant reforms in the upcoming Union Budget 2025-26. These changes aim to improve affordability, infrastructure, and innovation within the sector. The government has already introduced various schemes to promote EVs, but industry leaders believe more can be done to address manufacturing and consumer challenges.

Anshul Gupta, Managing Director of OPG Mobility, highlighted the rapid growth of the EV sector driven by sustainability goals, according to an Economic Times (ET) report. "Addressing infrastructure gaps, supply chain inefficiencies, and high manufacturing costs must take centre stage to make EVs more affordable and accessible to the masses," Gupta said. He also urged for financial support through subsidies, tax rebates, and investments in public charging infrastructure.

Photo Credit: PTI

Focus On Tax Reforms

As per the same report, Dinkar Agrawal from Oben Electric emphasised the need for structural reforms to lower costs and boost manufacturing. "Simplifying the GST structure with a uniform 5 per cent tax across EVs, components, and charging infrastructure is essential to reducing costs and fostering growth. Resolving the inverted GST structure on raw materials will ease working capital pressures and encourage sustainable manufacturing," Agrawal said.

Ishaan Parwanda of Trinity Touch pointed out disparities in the current tax system. "While EVs enjoy a 5% GST, lithium-ion batteries and charging services are subjected to an 18 per cent GST. We urge the government to reduce this GST rate to 5% for both charging services and lithium-ion batteries," Parwanda said. He also advocated for incentives under Atmanirbhar Bharat to boost local production.

Encouraging Local Production

Kunal Arya from ZELIO E Mobility Ltd stressed the importance of consistent policy support. "The government must introduce long-term subsidies akin to the FAME scheme, which will not only support the industry's expansion but also encourage widespread consumer adoption of electric vehicles," Arya said. He suggested reducing GST on spare parts from 28 per cent to between 5-12 per cent, the ET report added.

Raghav Arora of Statiq highlighted technology's role in advancing EV adoption. "Technology development will play a pivotal role in accelerating the growth of the electric vehicle ecosystem in India. Innovations in battery technology, charging infrastructure, and smart mobility solutions are essential to overcoming existing challenges," Arora said.

Infrastructure Development

The Union government has been proactive with initiatives like FAME India Schemes, PLI Scheme for Automobile Industry (PLI-Auto), PM E-DRIVE Scheme, PM e-Bus Sewa-Payment Security Mechanism (PSM) Scheme among others. These efforts aim at promoting EV adoption by addressing environmental pollution, energy security, and economic sustainability concerns.

As India prepares for its Union Budget 2025-26 announcement, stakeholders remain optimistic about decisive actions that could bridge infrastructure gaps while streamlining taxes further fostering innovation within this burgeoning sector.