Budget 2025: IESA asks govt to tax all new tech batteries at 5% GST

There is a disparity in the tax structure of batteries, GST for lithium-ion batteries is 18%, but other chemistries, like lead acid, sodium, and flow batteries and others, are at 28%

India Energy Storage Alliance on Wednesday said batteries, irrespective of technology type, must be uniformly taxed at 5 per cent GST like electric vehicles to support the emerging sector.

Ahead of the Union Budget, India Energy Storage Alliance (IESA) President Debi Prasad Dash told PTI that the government may consider protecting domestic cells and battery component manufacturers in the wake of an increase in imports of lithium-ion cells, which has risen to Rs 24,000 crore in FY24 from Rs 18,000 crore in FY23, especially from China. 

 

There is a disparity in the tax structure of batteries, he said, adding GST for lithium-ion batteries is 18 per cent, but other chemistries, like lead acid, sodium, and flow batteries and others, are at 28 per cent. On the other hand, for electric vehicles, the GST is 5 per cent.

"So, as an industry, we need support to this emerging sector, and all new technologies must be taxed at 5 per cent, and there should not be any difference between different technologies," Dash said.

He was responding to a query on IESA's wishlist in the upcoming Union Budget.

Dash further said there is a need for the government to support makers of battery components like cathode, anode, electrolyte, separator and copper foils for the 'Make in India' campaign for battery cells to be successful.

"This industry (components) is a big industry, but they cannot grow without government support because a huge investment is required. We at IESA interacted with multiple ministries and submitted a request similar to PLI of a Rs 9,000 crore support scheme for this industry," Dash added.

Such support will enable these companies not only to supply to Indian gigafactories but they would also have an opportunity to export to other countries, he said, adding that there is also a need for government support for capacity building and skills development for this industry.

When asked if the nascent domestic industry needed protection from increasing imports from China, Dash said that with the PLI scheme, the government has taken the first step to support Indian cell manufacturing and gigafactories.

The government can consider other steps like increasing custom duty over a period of time so that Indian companies can have a better pricing model, he added.

"In the last two years, in FY23, we saw around Rs 18,000 crore of import of lithium-ion cells, which has increased to Rs 24,000 in FY24," Dash noted.