GST 2.0 tilts scales towards ICE; EV penetration softens

The goods and services tax (GST) reforms clearly tilted the scales in favour of internal combustion engine (ICE) cars whose sales shot up by 20 per cent year-on-year in November, even as the electric vehicle penetration moderated across segments, according to data from Equirus Securities and the Federation of Automobile Dealers Associations (Fada).

- SOHINI DAS

While GST on ICE vehicles was brought down significantly, for electric cars it remained at 5 per cent. Passenger vehicle (PV) retail volumes jumped nearly 20 percent on-year in November, supported by improved affordability, better model availability and spillover demand from the festival season, which had been partly constrained earlier due to supply issues, Equirus said in its latest fuel-wise monthly retail tracker

On the other hand, electric car penetration came in at 3.7 per cent in November, well below the pre-GST rate-cut level of around 5 per cent, underlining a demand shift back towards ICE vehicles.

This trend is especially visible in the luxury car segment.

While luxury battery electric vehicle (BEV) penetration is higher in 2025 compared to 2024, Mercedes Benz India said that overall industry BEV has declined sharply from 16 percent to 12 percent in the September-November period following GST 2.0.