IESA Welcomes GST 2.0 Reforms for Batteries Urges EV Tax Cuts

Post by : Meena Rani

The India Energy Storage Alliance (IESA), a leading industry body promoting energy storage and electric mobility in India, has welcomed the latest reforms under the “GST 2.0” framework. These reforms have simplified the taxation of advanced batteries used in electric vehicles (EVs) and other clean energy applications.

IESA considers these reforms an important step toward encouraging innovation, supporting local manufacturing, and boosting India’s transition to cleaner and more sustainable energy solutions. At the same time, the alliance has asked the government to consider further tax reductions on EV components and charging services, which would make electric vehicles more affordable and accessible for consumers.

GST 2.0 Reforms: Leveling the Field for Battery Technologies

Under the new GST 2.0 framework, all advanced batteries have been brought under a single tax rate of 18%. Previously, lithium-ion batteries were taxed at 18%, while other emerging battery technologies like sodium-ion, flow, and metal-air batteries were taxed at 28%.

IESA has described this standardization as a “landmark step” for the Indian energy storage industry. By bringing all battery types under a single tax rate, the government has created a level playing field for emerging technologies. This move is expected to encourage innovation in battery development, particularly in long-duration energy storage solutions that are vital for renewable energy integration and grid stability.

Industry experts believe that these reforms will help domestic manufacturers compete more effectively and reduce costs for advanced batteries, which form the backbone of India’s growing EV sector.

Recommendations for EV Components and Charging Services

While welcoming the GST reforms for batteries, IESA has urged the government to extend similar benefits to EV components and charging infrastructure. Currently, EV parts attract taxes ranging from 18% to 28%, which can significantly increase the overall cost of electric vehicles.

IESA has suggested reducing the GST on EV parts to a uniform 5% slab. Additionally, the alliance has recommended lowering the GST on EV charging services and battery swapping from 18% to 5%. Another option, according to industry experts, could be to classify these services as the supply of electricity, which would also reduce costs for consumers.

These measures would make EVs more affordable for a larger section of the population, accelerate the adoption of electric mobility, and support India’s broader environmental and sustainability goals.

IESA’s Vision for a Sustainable Future

Debmalya Sen, President of IESA, emphasized that the GST reforms are a positive development for India’s clean energy ecosystem. He highlighted that similar steps, such as reducing GST on clean energy technologies like hydrogen fuel cells and ammonia, are already encouraging investment in sustainable solutions.

Sen stated that further reductions in GST for EV components and charging infrastructure would not only lower costs for consumers but also promote domestic manufacturing, innovation, and energy security. He added that such policy support is critical for India to meet its climate goals, reduce pollution, and create a greener transportation system.

The GST Council is currently reviewing proposals from industry stakeholders like IESA. If implemented, the recommendations for lower taxes on EV parts and charging services could bring substantial benefits to the EV sector, making electric vehicles more competitive with conventional vehicles.

Experts believe that these tax reforms, combined with ongoing government incentives for clean energy and electric mobility, will help India achieve its ambitious targets for electrification, reduce greenhouse gas emissions, and encourage innovation in battery and EV technology.

As the country moves toward a greener and more sustainable future, the cooperation between the government, industry bodies like IESA, and consumers will be key in making electric mobility a practical and widespread solution for all.

GST 2.0, IESA, advanced batteries, electric vehicle components, EV charging services