On April 9, The Times of India reported comments from Petr Janeba, Skoda’s Brand Director in India, advocating for a Goods and Services Tax (GST) incentive limited to smaller electric vehicles (EVs) less than four meters in length. According to Janeba, extending this 5% GST rate to larger and more expensive EVs could strain government finances. He suggested that offering subsidies for smaller vehicles would accelerate the adoption of EVs in India. Skoda Volkswagen India, having already invested Rs 8,000 crore in the country, is planning further expansion.
Janeba questioned the rationale behind subsidizing luxury EVs priced around Rs 60 lakh, pointing out that the current GST policy disproportionately benefits wealthier individuals. He argued that a focus on mass-market vehicles, as seen in Europe, the US, and China, would promote faster EV adoption. These regions prioritize subsidies for smaller, affordable EVs, which Janeba believes should be the model for India as well.
He further explained that if the subsidy applies to all EVs, including premium models, the funds would deplete more rapidly. Janeba suggested that supporting vehicles up to Rs 20 lakh would enable broader and quicker adoption. He also mentioned that the electric vehicle market should mirror the tax structure of traditional petrol and diesel vehicles, where incentives are tailored to smaller, more budget-friendly cars.
Janeba anticipates future tax adjustments to create a distinction between sub-four-meter EVs and larger models, a move he believes is necessary to maintain the subsidy for smaller vehicles. He emphasized the importance of adjusting GST rates on larger, more luxurious cars to support this strategy.
Skoda Volkswagen India is finalizing its strategy for the Indian EV market, intending to offer a range of products including high-end imported e-cars as well as locally developed, competitively priced electric vehicles.