Technology-Agnostic Policies and Incentives are the Need of the Hour for the Indian EV Industry

This article is authored by Dilip Chenoy, Chairman, IBSA (India Battery Swapping Association).

India is driving decarbonisation across sectors in order to meet its Nationally Determined Contributions of emerging as a net zero carbon emitter by 2070. With transportation contributing 13.5% of the country’s total CO2 emissions, it is no surprise then that the government is pushing for cleaner modes of mobility and moving away from fossil fuels.

With the rise of renewable energy infrastructure, coupled with sizeable growth in India’s installed capacity for electricity, electric mobility is fast gaining prominence as a sustainable mode of transport in India’s urban and semi-urban areas. Conducive policies and subsidies introduced by the government – both at central and,individually, at state levels – have targeted the increasing of indigenous development and production of electric vehicles (EV), nurtured growth of associated infrastructure like battery swapping and recharging stations and successfully reduced the price gap between electrics and their fossil fuel-burning counterparts to some extent. Sales of EVs shot up in May 2023 to cross 150,000 units – an astounding year-on-year growth of 125% - which is testament to the combined efficacy of these regulatory catalysts and incentives.

Battery Swapping – One Remedy for Several Challenges

Although EVs are rapidly gaining traction in India, range anxiety, costs and the extensive time required to recharge EV batteries continue to be choke points that are slowing down the widespread adoption of electric mobility. Battery swapping is a proven solution that alleviates all these concerns by providing virtually limitless range, reduces the price of the EV by 40%-45% by separating the cost of the battery and enables users to swap depleted batteries from their electrics with fully charged ones in a matter of a 2-3 minutes.


The advantages of battery swapping do not just end there. This solution enables optimal utilization of land by increasing the number of EVs that can be recharged from one facility in a day, which is a boon for Indian cities where space is at a premium. Furthermore, swappable batteries are much smaller, requiring nearly 40% less raw materials – for which India is fully dependent on imports – as compared to their fixed counterparts. As swappable batteries are recharged under optimal conditions and closely monitored, their longevity is increased significantly, and the level of safety enhanced manyfold.

With such advantages to offer, it is no wonder then that battery swapping is fast emerging as the preferred choice for charging EVs in India. Today, there are more than 50 companies – which include conglomerates, OEMs, and Oil and Gas marketing companies – that are associated in some way with battery swapping in the country.

Need for a Level Playing Field

Although the Union Budget of FY23 heralded the need for a Battery Swapping Policy in India, it is yet to be rolled out and implemented. As of today, the majority of the government’s subsidies and policies predominantly focus on fixed batteries, while swappable batteries have not been mentioned. An example of the disparity can be seen in the current GST tax structure for lithium-ion batteries intended for EV applications. EVs with fixed batteries attract 5% GST. However, batteries sold separately for the same EV use attract an 18% GST. This puts swappable batteries at a severe disadvantage, the customer does not have equal choice. It is expected that the issue will be addressed when the full budget is presented later this year, as GST parity on swappable batteries is the need of the hour.

The remedy to this issue is something akin to what the government had already introduced back in 2018 to promote ethanol blending in petrol in order to reduce India’s reliance on oil imports. At the time, the Ministry of Petroleum and Natural Gas had issued a notification based on approval by the GST Council, which resulted in a reduction of GST to 5% for all ethanol destined to be blended with petrol. For all other applications, ethanol would continue to attract a GST of 18%.

Such a differential GST structure could be applied to EV batteries as well, regardless of whether they are fixed or swappable, while they can attract a higher percentage of taxes. This will create a level playing field for both technologies to mature to a point where the market can decide on which EV recharging solution it will choose to go for in the future.

One possible way of preventing misuse of this proposed differential GST structure could be to apply the reduced rate only to those batteries that are ARAI certified to AIS156 Level 2 for use in electric vehicles alone. The Department of Heavy Industries (DHI), being a nodal agency, may ask OEMs of vehicles and batteries to be registered on its portal, to avoid leakage. Further, batteries used in swapping could be given a Unique Identification Number, as was defined in the Draft Battery Swapping Policy. Similarly, other incentives and subsidies – like FAME and the PLI scheme - should be amended to be technology agnostic, but application centric. This will bring swappable batteries under their ambit and help the rapid maturing of this recharging solution.

Powering Last Mile Mobility in India

If allowed to grow and flourish, battery swapping is expected to become the preferred choice for recharging 2-, 3- and light 4-wheelers in the country. These vehicles constitute the last mile mobility segment in India, which are the segments seeing the most rapid transition towards electric mobility in terms of volume. Thus, battery swapping will be directly responsible for making electric vehicles accessible to more Indians. Technology agnostic fixed or swappable battery solutions will also invite large investments in India in line with the Make in India vision of the Government of India. Additionally, conducive regulatory policies, coupled with unbiased schemes and incentives, will build a nurturing environment where a bevy of EV technologies will emerge, giving customers the opportunity to pick the ones that best suit their requirements and budgets.

Disclaimer: Views and opinions expressed in this article are solely those of the original author and do not represent any of The Times Group or its employees.
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