GST 2.0, which cut tax on ICE vehicles, has widened the price gap between ICE models and EVs.
15 Dec 2025 | 1349 Views | By Ketan Thakkar and Kiran Murali
India’s largest car maker, Maruti Suzuki, is reassessing the passenger vehicle industry’s forecast of electric vehicle penetration by the end of the decade after recent GST rationalisation widened the price gap between ICE models and EVs.
GST 2.0 reduced the tax on small ICE cars [up to 4 metres ...
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India’s largest car maker, Maruti Suzuki, is reassessing the passenger vehicle industry’s forecast of electric vehicle penetration by the end of the decade after recent GST rationalisation widened the price gap between ICE models and EVs.
GST 2.0 reduced the tax on small ICE cars [up to 4 metres in length] to a flat rate of 18%, compared with 31% (including cess) earlier, while the tax on mid- and large-sized ICE cars [with a length of over 4 metres] has been reduced to 40%, as against 43%-50% (including cess) earlier.
However, the GST on EVs continues at 5%. While the lower tax on petrol and diesel cars has boosted overall vehicle demand, it has made EVs appear relatively more expensive to value-conscious buyers.
Maruti Suzuki had earlier projected electric vehicle penetration in passenger vehicle sales to be in the range of 13-15% by 2030. Partho Banerjee, the company’s senior executive officer for marketing and sales, said the estimate was made before the GST changes, and it needs to be reassessed now.
“We had given a forecast that by 2030, the industry volume will be in the range of 5.5 to 6 million units and electric vehicle penetration will be around 13-15%. But that was before GST 2.0. Now, we need to study the market again,” he said, while adding that recent months have shown a softening in EV penetration even as overall passenger vehicle sales remained strong.
Industry data shows that electric car penetration has slipped below earlier levels despite year-on-year growth in volumes. For instance, electric car sales rose 63% year-on-year in November to 14,700 units. But the penetration stood at just 3.7%, well below the pre-GST level of 5%.
Currently, the Indian electric car market is dominated by Tata Motors, which holds the largest market share, followed by JSW MG Motor and Mahindra & Mahindra.
Maruti Suzuki has already begun production of its first battery electric vehicle, the eVitara, at its Gujarat plant, with units currently being exported to the UK, and slated for Japan in January and India in the coming months.
While Maruti Suzuki has not yet disclosed the exact launch timeline for the domestic market, the management noted that eVitara dispatches to dealerships will commence in December, making the vehicle available to consumers for test drives.
The automaker believes EV adoption in India is constrained by gaps between claimed and real-world range, limited charging infrastructure, and uncertainty over resale value, which together have weakened consumer confidence.
To address this, the carmaker is focusing on real-world driving range and building a comprehensive EV ecosystem before its launch. This includes installing 1 lakh charging points by 2030, and has already readied 1,500 EV-enabled workshops. The company will also introduce an assured buyback program.
Banerjee said the EV market will reach an inflection point once the ecosystem is strong enough to give consumers the confidence to buy an electric vehicle as their primary car, rather than limiting it to a second vehicle. ENDS