IESA Calls for Uniform 5% GST on All New Technology Batteries to Support Sector Growth

The India Energy Storage Alliance (IESA) has urged the government to apply a uniform 5% GST on all battery types, similar to electric vehicles. This move aims to bolster the growing battery sector. IESA President Debi Prasad Dash highlighted the need for this change ahead of the Union Budget discussions.

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Dash pointed out that the current tax structure is inconsistent. Lithium-ion batteries are taxed at 18%, while other types like lead acid, sodium, and flow batteries face a 28% GST. In contrast, electric vehicles enjoy a 5% GST rate. "As an industry, we need support for this emerging sector," Dash stated.

Support for Domestic Manufacturers

With rising imports of lithium-ion cells, particularly from China, Dash suggested measures to protect local manufacturers. Imports have surged from Rs 18,000 crore in FY23 to Rs 24,000 crore in FY24. He proposed that domestic cell and battery component makers should receive government backing.

Dash emphasised the importance of supporting manufacturers of key battery components such as cathodes, anodes, electrolytes, separators, and copper foils. This support is crucial for the success of the Make in India initiative in battery cell production.

Investment and Export Opportunities

The IESA has engaged with various ministries to propose a Rs 9,000 crore support scheme similar to the Production Linked Incentive (PLI) scheme. This initiative would help companies supply Indian gigafactories and explore export opportunities.

Dash also mentioned the need for government assistance in capacity building and skill development within the industry. This would ensure that local companies can compete effectively on a global scale.

Addressing Import Challenges

When asked about protecting the domestic industry from increasing Chinese imports, Dash acknowledged the government's initial steps through the PLI scheme. He suggested further actions like gradually raising customs duties to enhance pricing models for Indian firms.

The significant rise in lithium-ion cell imports over two years underscores the urgency for these measures. The IESA's recommendations aim to strengthen India's position in the global battery market while fostering domestic growth.