IESA Calls For GST Reduction For Battery and EV Infrastructure

As the 10th annual India Energy Storage Week (IESW) approaches, the India Energy Storage Alliance (IESA) has presented a wishlist to the government, seeking pivotal changes to bolster the energy storage and electric vehicle (EV) sectors. Slated for July 1-5, 2024, in New Delhi, IESW promises to be a landmark event with key industry announcements and strategic discussions.

In its proposal, IESA has urged the government to lower the goods and services tax (GST) on batteries and EV charging infrastructure services, including battery swapping. Currently, lithium-ion batteries are taxed at 18 per cent, while other batteries face a hefty 28 per cent GST. IESA President Rahul Walawalkar has called for a unified 18 per cent GST rate for all batteries and a reduction to 5 per cent or 18 per cent for charging infrastructure services, down from the existing 28 per cent.

“The high GST rates on batteries and charging infrastructure are stifling growth in the sector. Aligning these rates with global standards will make EVs more accessible and accelerate India's transition to clean energy,” Walawalkar stated.

In addition to tax reductions, IESA advocates for the expansion of production-linked incentive (PLI) schemes to include battery components and raw material processing industries. The current PLI schemes, such as the advanced chemistry cell battery (ACC-PLI), Auto-PLI, and Auto Components PLI, have received praise for their role in boosting domestic manufacturing. However, IESA believes that further expansion is necessary to create a robust supply chain and support ecosystem for battery manufacturing in India.

The EV market in India is witnessing rapid growth, but significant barriers remain. The lack of widespread charging infrastructure and the high upfront costs of EVs are major deterrents. IESA's wishlist includes recommendations for streamlining regulatory processes and providing clear guidelines for clean energy projects. Simplified regulations would facilitate faster implementation and reduce uncertainties for investors, making the sector more attractive.

Affordable financing is crucial for scaling up clean energy projects. IESA emphasises the need for innovative financial mechanisms and incentives to encourage private sector participation. Moreover, the alliance calls for enhanced research and development support to improve battery performance and reduce costs, highlighting the importance of public-private partnerships in achieving these goals.

Public awareness about the benefits of clean energy is still limited in India. IESA suggests a comprehensive strategy to educate the public and invest in skills development programs. “A well-informed public and a skilled workforce are essential for sustaining the momentum in the clean energy transition,” Walawalkar said.

IESA's recommendations come at a crucial time when the government is gearing up for its next phase of clean energy initiatives. The alliance’s suggestions, if implemented, could significantly enhance India’s energy storage capabilities and accelerate the adoption of electric vehicles, thereby contributing to the country’s climate goals.