GaadiWaadi –
Higher GST on EVs risks slowing adoption, raising costs, hurting investments, and derailing India’s clean mobility growth ambitions
India’s electric vehicle (EV) story has just begun to gain momentum, but a fresh recommendation by the Group of Ministers (GoM) on Goods and Services Tax (GST) could deal a serious blow to the sector. The proposal suggests increasing GST on EVs priced above ₹20 lakh from the current 5% to as high as 28%. If implemented, this move could derail the government’s ambitious EV adoption roadmap and discourage both customers and manufacturers at a critical growth stage.
The Proposed GST Changes
At present, all EVs—irrespective of their price—attract a uniform GST rate of 5%. The GoM has now recommended a tiered structure:
-
EVs priced between ₹20 lakh and ₹40 lakh: GST to rise from 5% to 18%.
-
EVs priced above ₹40 lakh: GST to jump from 5% to 28%.
This effectively means a direct cost escalation of up to 22–23% for buyers. For instance, a ₹25 lakh EV could become costlier by over ₹5 lakh, while a premium EV costing ₹40 lakh may see a price increase of ₹8–10 lakh.
The Models That Will Be Impacted
Some of the most awaited mainstream EVs fall in the ₹20–40 lakh bracket. These include:
-
Mahindra BE 6 and XEV 9e – the new-age SUVs positioned as global products from India.
-
Tata Harrier EV and Hyundai Creta EV – two mass-market SUVs expected to be major volume drivers.
-
Kia Carens Clavis EV – a family-centric MPV that could have opened up new customer segments.
-
MG ZS EV – one of the earliest urban EVs to gain traction, alongside the sportier MG Cyberster.
In the premium segment, Tesla Model Y, BYD’s complete lineup (Seal, Atto 3, e6, Sealion), and all luxury EVs from Mercedes, BMW, Audi, and Volvo will get substantially costlier. As per a recent report, Tesla’s India entry price is currently at ₹60–68 lakh under the 5% GST rate. If the 28% slab is applied, the same car could cross ₹75–85 lakh, putting it out of reach for a large share of early adopters.
Why This Matters Now
India’s EV adoption is already facing multiple headwinds. Even without higher GST, customers are cautious due to:
-
Huge resale value losses: EVs tend to depreciate faster than petrol or diesel cars.
-
Battery replacement fears: High replacement costs create long-term ownership anxiety.
-
Inadequate charging network: Public chargers are still limited, especially outside metro cities.
-
Trust deficit in new technology: Many buyers remain hesitant to shift from tried-and-tested internal combustion engine (ICE) cars.
Adding a sharp GST hike at this stage could intensify these barriers, slowing adoption further instead of accelerating it.
Impact on Industry and Investments
Several automakers have invested billions into localising EV production in India. Mahindra, Tata, Hyundai, Kia, and MG are betting big on the ₹20–40 lakh EV segment as a sweet spot for the Indian middle class and upper-middle class. A sudden GST increase could disrupt their business models and delay breakeven timelines.
New entrants like VinFast and Tesla, who are planning large-scale investments and manufacturing bases in India, will also be discouraged. If their products become 20–25% more expensive overnight, market penetration will be extremely difficult.
For consumers, the difference is stark. An EV priced at ₹30 lakh today will suddenly cost close to ₹36–37 lakh under the 18% slab. For luxury EVs above ₹40 lakh, the GST jump to 28% could mean price hikes of ₹10–15 lakh. Such steep increases risk undoing years of government incentives aimed at making EVs more attractive.
The Bigger Picture
India has committed to ambitious climate goals, including a strong EV push to reduce dependence on fossil fuels. Yet, policies like this could send a conflicting signal. Instead of incentivising clean mobility, the proposed GST slabs risk making EVs elitist products—accessible only to a handful.
At a time when global automakers are racing to electrify, India’s EV ecosystem needs price parity and buyer confidence, not new hurdles. If affordability is compromised, the dream of mass EV adoption by 2030 could remain just that—a dream.
Conclusion
The GST hike on EVs above ₹20 lakh may look like a revenue-driven move, but its long-term cost could be far higher—stalling adoption, discouraging investments, and hurting India’s clean mobility mission. Policymakers must weigh the immediate fiscal gains against the broader economic and environmental losses. For India to truly lead in EVs, affordability and accessibility should remain at the core of policy decisions.
The post New Proposed GST Slab Likely to Derail the EV Adoption Growth in India appeared first on Gaadiwaadi.com – Latest Car & Bike News by Gaurav Yadav.
