GST Council keeps 5% EV tax, ensuring affordability and market stability.
Flipkart, Swiggy, Amazon accelerate EV adoption in last-mile logistics operations.
Financing gaps and 18% GST on charging hinder wider EV business models.
On September 3, the GST Council confirmed the retention of the concessional 5% GST rate on electric vehicles (EVs), supporting India’s clean mobility push amid the sweeping tax overhaul dubbed GST 2.0.
While the old structure had 5%, 12%, 18% and 28% (plus cess on certain items), the new structure comes with a two-tier system—5% for essentials and 18% as the standard rate, along with a 40% rate for sin and luxury goods. There was speculation that premium EVs could be moved to higher slabs. However, the Council retained the 5% rate with no additional cess for all categories of EVs regardless of their connection with mass or luxury markets.
The Ministry of Heavy Industries also directed automobile companies—carmakers as well as two-wheeler manufacturers—to display posters showing a comparison of old and new prices at all dealerships across the country by September 14.
Expected to incur ₹20–30 crore on this activity, Business Standard reported that the automobile industry is expected to place the posters at dealerships by the end of this week. Luxury car companies have been exempted from the poster-printing mandate.
According to ET, this retention of tax implies that while imported models from Tesla, Mercedes-Benz, BMW and BYD will remain within the same concessional range, domestic launches such as Tata’s Harrier EV and Mahindra’s XEV 9e will avoid significant price increases.
Reports say the announcement by the Council on September 3 gave a wave of relief for the EV makers of the country. Business Standard reported that the government should treat hybrid cars like EVs for tax purposes, a view shared by Toyota, which noted that supporting both options can help curb petrol and diesel use as India’s economy grows.
EV sales reached 15,500 units, with Tata Motors leading the market with a 40% share, followed by Mahindra at 18% between April and July this year. Tesla has also entered with its Model Y, though deliveries are yet to begin, according to ET.
The GST rate on all EVs was reduced from 12% to 5% in 2019 making EVs more affordable for individual buyers and fleet operators. By keeping the rate at 5% compared to 28% for conventional vehicles intact, the government has signalled stability in its green mobility roadmap. For e-commerce players where logistics is a massive cost centre, this tax relief can accelerate EV adoption by lowering upfront acquisition costs. The new GST rate cuts will come into effect on September 22, 2025.
EVs in Last-Mile Delivery
India’s last-mile delivery networks—food delivery during festive rushes, parcel drops during mega sales—are increasingly being connected by EVs.
Flipkart has committed to transitioning to a 100% EV fleet by 2030 and has already deployed thousands of e-vans across key cities. The company deployed EVs for its last-mile delivery more than five years ago. In September 2024, it touched a milestone of 10,000 EVs in its last-mile supply chain. Today the company has about 13,300 EVs in its fleet, according to Yourstory, a digital publication covering Indian start-ups.
Flipkart’s electric ambition is valid given that EVs have a high upfront cost but the total ownership cost is much lower than traditional internal combustion engine vehicles and India is increasingly getting on board with them.
“Electric mobility is no longer the future, it is the present and it is redefining the way e-commerce logistics operates in India. At Flipkart we recognised this potential early and began integrating EVs into our last-mile operations more than five years ago,” said Nishant Gupta, head of Sustainability, Flipkart.
“Our approach goes beyond fleet numbers. We are building an enabling ecosystem—collaborating with original equipment manufacturers, introducing accessible financing for adoption and ensuring our Wishmasters [delivery personnel operating these EVs] experience smoother, quieter and more efficient rides. We continue to invest in critical infrastructure, from charging hubs and battery-swapping stations to flexible home-charging models, ensuring long-term scalability and resilience,” he added.
Similarly, in August, Swiggy partnered with Bounce, an electric mobility company, to accelerate the adoption of EVs for its delivery partners. This collaboration will make electric mobility more accessible and affordable for Swiggy and Instamart delivery partners. This move aims to reduce the carbon footprint of hyperlocal deliveries while lowering operational costs for delivery partners.
“This partnership with Bounce is a significant move towards greener and more cost-effective delivery. We aim to scale this partnership across multiple cities in the country in the coming months. We stay committed to our goal of having a 100% electric delivery fleet by 2030,” said Saurav Goyal, senior vice president-driver and delivery operations, Swiggy.
According to reports, Zomato also deployed battery-swapping models for delivery partners, making EV usage more viable. Meanwhile, Amazon India aims to include 10,000 EVs in its delivery fleet by 2025.
Industry Perspective on the Move
EV adoption is not just a corporate sustainability goal but also a business imperative. Logistics costs in India are high and rising fuel prices make EVs attractive. Industry insiders argue the GST cut strengthens the business case.
The Council’s decision on EVs ensures that cost will not be a barrier but a catalyst in delivering a swift infrastructure and ecosystem. Policy measures for EV components such as GST relief, PLI schemes and more are creating an environment to promote clean mobility. However, EV buyers currently face a range of financing challenges such as high interest and insurance rates, low loan-to-value ratios and limited specialised financing options, according to a 2021 report titled Mobilising Finance for EVs in India published by Niti Aayog and Rocky Mountain Institute, a research institute for clean energy.
The upkeep and repairs of these EVs present another challenge since battery swapping and charging are considered "maintenance and repair" services.
As reported by ET, changing or charging car batteries involves the transfer or purchase of energy much like purchasing electricity. Taxing it at 18% GST as any other utility service makes it difficult for people to adopt EVs and for businesses to use battery-swapping models efficiently.
