IESA: Further tax cuts on Li-ion would be ‘essential boost’ for India’s energy storage industry

LinkedIn
Twitter
Reddit
Facebook
Email
IESA’s Debi Prasad Dash said that the EV and renewable energy industries alike will benefit from the cut although IESA colleague Rahul Walawalkar urged the government to go further. Image: ACME.

India’s Goods and Services Tax (GST), a single tax applicable across the whole of the country, will be lowered for lithium-ion batteries by 10% in a move which has been welcomed by the India Energy Storage Alliance (IESA).

All goods and services are taxable under the law, which was introduced in 2017. Along with a wide range of other changes, the GST rates on lithium-ion batteries has dropped from 28% to just 18%. In related news, fuel cell vehicles will see their GST reduced from 28% to 12%.

With electric vehicles (EVs), renewable energy integration and commercial and industrial (C&I) diesel replacement providing particularly strong drivers, there are around 20 different applications for energy storage in India today, IESA said in a statement issued yesterday. The trade advocacy group has given a bold estimate that the country’s energy storage market could reach more than 300GWh by 2025.

This rise would be at least partly contingent on India developing several Gigafactories of its own for battery production. At present, battery cells are imported and converted into battery modules by domestic producers.

This article requires Premium SubscriptionBasic (FREE) Subscription

Enjoy 12 months of exclusive analysis

Not ready to commit yet?
  • Regular insight and analysis of the industry’s biggest developments
  • In-depth interviews with the industry’s leading figures
  • Annual digital subscription to the PV Tech Power journal
  • Discounts on Solar Media’s portfolio of events, in-person and virtual

Or continue reading this article for free

The cut has been welcomed by IESA director Debi Prasad Dash, who said: “Both electric vehicle and renewable energy industry will be benefited by this step.”

He added that IESA had “sent several letters” to the GST council on the matter as well as discussing it with the likes of the Ministry of Renewable and New Energy (MNRE) and other government agencies.

Meanwhile, CEO of hybrid and energy storage business at major EPC firm Sterling & Wilson, Deepak Thakur also applauded the GST reduction.

“It’s a welcome move from the government to reduce GST on lithium-ion batteries from 28% to 18% and will surely accelerate overall decarbonisation objective at the national level. It is indeed a positive development that the government has also cut GST on raw materials for batteries so as to boost domestic manufacturing,” he said.

He went on to say that as one of the world’s leaders in renewable energy deployment, there is great potential to pair this with batteries in India. Adding batteries to the likes of microgrids, large-scale renewable energy generators and hybrid power projects not only improves the “dispatch ability” of such resources but also creates “improved viability” for them, Thakur said.

Need to go further – in line with solar PV equipment

IESA executive director Dr Rahul Walawalkar, himself an advisor to the Indian government MNRE said however that a further reduction in GST to bring batteries and their components in line with electric vehicles (which are taxed at 12%) or solar components (taxed at just 5%) would be “essential to boost energy storage adoption in India”. Walawalkar said this would also help foster investment in manufacturing. Also, according to Walawalkar, it is not just lithium batteries that need this boost.

“We urge finance ministry to extend the rate reduction to other forms of energy storage technologies including advanced lead acid, sodium based batteries, flow batteries, metal air batteries, ultra-capacitors, fuel cells and thermal storage technologies.”

In agreement with Walawalkar on this point was the senior director for energy storage at Delta Electronics, Hiren Shah, who is also on the leadership team at IESA. Shah said the GST cut was “a welcome move – although 5% [rate] similar to [the] solar industry would have been ideal”.

Hiren Shah added that there are still “some finer points” which need further examination, highlighting for example that “ironically if the lithium- ion battery is sold fitted inside an EV the GST would be 12%.”

31 October 2025
Greater Noida, India

Read Next

October 1, 2025
Dr Mahdi Behrengrad, head of energy storage at Pacifico Energy, speaks to Energy-Storage.news ahead of next week’s Energy Storage Summit Asia 2025 in Manila.
Premium
September 26, 2025
Energy-Storage.news Premium speaks with Thomas Cornell, CEO and President of Prevalon Energy, at the RE+ 2025 trade show, about the global consequences of the budget reconciliation bill for BESS and renewables.
September 25, 2025
Italian multinational energy company Eni intends to become a player in battery cell manufacturing for stationary energy storage systems.
September 25, 2025
Climate and energy transition consultant Sunita Dubey reflects on the work done to put Vietnam on the global energy storage industry map and the ambitious pathway forward.
September 24, 2025
The Queensland government has invested AU$48 million to overhaul the ageing 5.7GWh Wivenhoe Pumped Hydro Power Station in Australia.

Most Popular

Email Newsletter