GST reforms done, let us opt for the fastest path to clean mobility

We need a stable tax-policy roadmap that’s better calibrated to incentivize the use of green vehicles

- RAJEEV CHABA

India’s recent goods and services tax (GST) rationalization is an important step, but its significance goes beyond simplifying tax slabs.

The reform provides clarity that the auto industry has long needed. Yet, clarity alone is not enough. What matters now is how this policy can accelerate the adoption of cleaner and more sustainable mobility options that will define India’s economic and environmental trajectory for the next decade. We stand at a crossroads: the government has given the sector a cleaner baseline, but the real challenge and opportunity both lie in aligning the country’s fiscal policy with its long-term green mobility goals.

For years, automotive taxation revolved around conventional parameters like engine size, vehicle length or fuel type. That made little sense in a world moving rapidly towards electric vehicles (EVs), hybrids and alternative-fuel technologies. Today, with EV penetration still in single-digits and hybrid and flex-fuel adoption just beginning, policy must explicitly reward these technologies. GST rationalization clears a lot of structural clutter, no doubt, but unless incentives are tied more closely to cleaner technologies, this clarity risks being underused.

Taxation policy is a strategic tool to shape India’s mobility landscape whose benefits need to be appreciated and maximized.