IESA Welcomes GST Rate Cut on Li-Ion Batteries

The GST Council’s move came after the recognition of the need to enhance the energy storage industry and its related segments.

India Energy Storage Alliance (IESA) has welcomed the GST council’s reduction of goods and services tax (GST) for Lithium-Ion Batteries from 28 percent to 18 percent.

The GST Council’s move came after the recognition of the need to enhance the energy storage industry and its related segments.

Commenting on the development, Debi Prasad Dash, Director, India Energy Storage Alliance (IESA) said, “We welcome the steps taken by the GST Council on the reduction of the GST for Lithium Ion Batteries from 28% to 18%”. Both electric vehicle and renewable energy industry will be benefited by this step. IESA as an industry had sent several letters to GST council earlier on this reduction and also raised the issue with authorities at Ministry of New and Renewable Energy (MNRE), Ministry of Power (MOP) and NITI Aayog at different occasions.”

The move by the GST Council received an appreciation by the IESA Members though they had different views over other aspects that the council could have considered.

Hiren Shah, Sr Director- Energy Storage, Delta and Member of IESA Leadership Council commented, “It’s a welcome move to reduce the GST from 28% to 18% although 5% similar to solar industry could have been ideal. Nevertheless, it’s a welcome step. Ironically if the lithium- ion battery is sold fitted inside an EV the GST would be 12%. These are some of the finer points which still need to be looked into.”

The reduction in the goods and services tax for the Li-Ion batteries is seen as a major boost to the country’s energy storage industry. Majority of the storage capacity would be consumed in the renewable energy segment which is another bigger market to be harnessed.

Moreover, Dr. Rahul Walawalkar, Executive Director of IESA and member of Expert Committee setup by MNRE for drafting National Energy Storage Mission agrees with Hiren and said, “further reduction of GST for energy storage from to 5% (similar to solar components) or to 12% (similar to an electric vehicle) is essential to boost the energy storage adoption in India, which can help accelerate investment in manufacturing as well. We urge finance ministry to extend the rate reduction to other forms of energy storage technologies including advanced lead acid, sodium based batteries, flow batteries, metal air batteries, ultra-capacitors, fuel cells and thermal storage technologies.”

While, Deepak Thakur, CEO – Hybrid and Energy Storage business, Sterling and Wilson said, “It’s a welcome move from the government to reduce GST on lithium-ion batteries from 28% to 18% and will surely accelerate overall decarbonization objective at the national level. It is indeed a positive development that the government has also cut GST on raw materials for batteries so as to boost domestic manufacturing. India is the third largest contributor in the world to renewable energy expansion. This green energy capacity build up offers in itself the immense potential for battery energy storage adoption. Integration of battery energy storage to existing and new renewable energy projects, micro-grid applications, hybrid power projects would not only improve dispatch ability of these energy assets but also create improved viability.”