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The government has finally reduced the GST on the electric car batteries by ten percent. The GST Council set up by the Government of India has reduced the GST rate on lithium-ion batteries from 28 percent to 18 percent. The reduction in GST rate on batteries will reduce the overall price of electric vehicles in the country.
A battery pack is a vital component in an electric vehicle and with the reduction in GST rate on batteries, the prices of electric vehicles are expected to be reduced by around 8-10 percent. Currently, Mahindra & Mahindra and Tata Motors are the only manufacturers producing electric cars in the Indian market.
But the prices of the electric cars are unlikely to be reduced with immediate effect, as the batteries and other components are sourced in advance. So, when the manufacturers source a fresh batch of batteries, the prices of the electric vehicles will also be reduced.
Both Mahindra & Mahindra and Tata Motors are expected to make a price revision in the near future. Apart from electric cars, there are several electric two-wheeler manufacturers in the country who will also benefit from the reduction of the GST rate.
The reduction in GST rate on lithium-ion batteries will also help the companies willing to manufacture the batteries in India. The import duty on such batteries stands at 20 percent and manufacturing batteries in India could also help the electric mobility sector.
Currently, all the electric vehicles rely on the imported lithium-ion batteries and the scenario could drastically change, if the batteries are locally produced. The local production will also reduce the price of the batteries and in turn, the electric vehicles will be cheaper.
Thoughts On The Reduction Of GST On Electric Car Batteries
The electric vehicles are said to be the future of mobility and major automakers are developing electric cars for the Indian market. Now, with the reduction of GST on batteries, the electric cars in India will become cheaper and it will encourage more people to buy eco-friendly vehicles.