Industry Urges GST Rationalisation on Lithium-Ion Batteries to Accelerate India’s Energy Storage Manufacturing – EQ
In Short : A senior executive from Kushmanda Power has urged the government to reduce GST on lithium-ion batteries by 5 percent, stating that high taxation is slowing domestic manufacturing growth. The proposal highlights the need for tax parity, supportive regulations, and expanded incentives to strengthen India’s battery ecosystem, lower costs, reduce import dependence, and support the country’s clean energy and electric mobility ambitions.
In Detail : The Indian energy storage industry has renewed its call for policy reforms, with Kushmanda Power’s Chief Financial Officer emphasizing the urgent need to reduce GST on lithium-ion batteries to boost domestic manufacturing. According to industry leaders, the current tax structure places an unnecessary cost burden on locally manufactured batteries, making them less competitive compared to imported alternatives at a time when demand for storage solutions is rapidly rising.
The CFO pointed out that lithium-ion batteries are a critical component for electric vehicles, renewable energy integration, and grid-scale storage, yet they continue to attract a significantly higher GST rate. This, he argued, creates a mismatch between national clean energy goals and taxation policies, ultimately slowing down investment and scale-up of manufacturing facilities within the country.
Reducing GST by 5 percent would, according to the industry, immediately lower production costs and improve price competitiveness for Indian manufacturers. Such a move could also stimulate demand across multiple sectors, including electric mobility, rooftop solar, and industrial energy storage, making clean technologies more accessible to consumers and businesses alike.
The executive also highlighted that India remains heavily dependent on imports for battery components and cells, exposing the sector to global supply chain disruptions and price volatility. A more favourable tax regime, he said, would encourage companies to invest in local value addition, reducing reliance on overseas suppliers and strengthening energy security.
In addition to tax reforms, concerns were raised about regulatory complexities, particularly around fire safety and compliance approvals. Lengthy certification processes and inconsistent norms across states were identified as major hurdles that delay project execution and increase operational costs for manufacturers and system integrators.
The CFO stressed that policy support should not be limited only to battery cell manufacturing but extended across the entire energy storage value chain. This includes battery packs, energy storage systems, and balance-of-system components, which together play a crucial role in delivering reliable and scalable storage solutions.
Production-linked incentive schemes were also highlighted as a powerful tool to accelerate growth, provided they are broadened to include downstream manufacturers. Industry players believe that a holistic incentive framework would help India build globally competitive battery manufacturing capabilities rather than remaining an assembly-driven market.
The demand for energy storage is expected to rise sharply as India expands its renewable energy capacity and works toward long-term decarbonisation targets. Without timely policy interventions, industry leaders warn that the country risks falling behind in a sector that is strategically vital for both economic growth and climate commitments.
Overall, the call for GST reduction reflects a broader industry push for coherent, forward-looking policies that align taxation, incentives, and regulations with India’s clean energy vision. Supportive reforms, stakeholders argue, could unlock large-scale investments, create jobs, and position India as a global hub for advanced battery and energy storage manufacturing.
