The Indian electric vehicle market is experiencing rapid growth, but a proposal has caused worry within the auto industry. A group of ministers, formed to review GST rates, has suggested increasing the GST on electric cars priced above ₹20 lakh from 5% to 18%. Although the GST Council has not yet made a final decision, the discussion itself has begun to affect the perspectives of companies and customers.
Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility MD Shailesh Chandra stated that EVs have made tremendous progress in India over the past year. The on-road prices of EVs and ICE vehicles are now almost equal in many SUV segments.
Furthermore, there are over 24,000 public charging stations across the country, and cars with a real-range of up to 500 kilometers are available. The concessional 5% GST slab has been crucial in gaining consumer trust. If this rate increases, the pace of EV sales and adoption will slow down.
Mahindra & Mahindra commented that the 5% rate helps maintain a balance between the prices of EVs and traditional vehicles, especially in the ₹10 to ₹40 lakh segment. MG Motor India MD Anurag Mehrotra stated that it helped promote EVs. He demanded zero GST and emphasized the need to simplify charging infrastructure and home charging facilities.
Mercedes-Benz India MD and CEO Santosh Iyer said that entry-level cars in the luxury EV segment could be the most affected. While customers of high-end cars are less price-sensitive, the lower tax slab has helped in building the necessary sales volume. In July 2025, a total of 15,528 electric cars were sold in India, a 93% increase compared to the previous year.
