India cuts tax rate on electric vehicles to boost uptake

Mahindra showcases its new electric vehicle, ATOM, at the India Auto Show in Greater

NEW DELHI (Reuters): India has slashed taxes on electric vehicles and chargers, as it looks to encourage the use of more environmentally friendly cars.

The goods and services tax (GST) on electric vehicles and chargers was reduced to 5% from a previous 12% and 18% respectively, India’s finance ministry said in a statement.

The government had earlier this month given tax breaks in the federal budget for consumers buying electric vehicles. Saturday’s decision to slash the tax was taken at a meeting of the GST council chaired by India’s Finance Minister NirmalaSithraman in New Delhi.

India, the world’s third-biggest emitter of greenhouse gases and home to 14 of the world’s most polluted cities, is aiming for electric vehicles to account for 30% of all passenger vehicle sales in the country by 2030. They currently make up less than 1%, largely due to a lack of charging infrastructure and the high cost of batteries.

Sitharaman said during the budget announcement that the government’s plans was to make India a hub of electric vehicle manufacturing, with large manufacturing plants for lithium storage batteries and solar electric charging infrastructure.

The government also removed import taxes earlier this month on some auto components to help boost electric vehicle sales and reduce the country’s dependence on fossil fuels.