The Ministry of Heavy Industries addressed Unstarred Question No. 2718 on December 16, 2025, regarding the impact of electric vehicles (EVs) on tax revenue. Smt. Rachna Banerjee inquired about the government's awareness of EV costs compared to internal combustion engine (ICE) vehicles, projected savings on crude oil imports and foreign exchange reserves at 10%, 30%, and 50% EV sales shares, and plans to compensate for tax revenue loss from reduced fossil fuel sales. The Minister of State for Heavy Industries, Shri Bhupathiraju Srinivasa Varma, responded that the total cost of ownership is relevant when comparing EVs and ICE vehicles, but the upfront cost of EVs is currently higher. He also stated that the Ministry of Heavy Industries has not carried out any study or assessment regarding the projected annual savings or the compensation plans for tax revenue loss.
Key Entities Referenced
Ministry of Heavy Industries: Indian government ministry responsible for policies related to heavy industries, including the assessment mentioned in the document.
EV: Electric Vehicles, the subject of the parliamentary question regarding their impact on tax revenue and costs.
ICE vehicles: Internal Combustion Engine vehicles, used as a comparison point for EVs regarding cost.
Lok Sabha: The lower house of the Indian Parliament, where the question was raised.
GOVERNMENT OF INDIA
MINISTRY OF HEAVY INDUSTRIES
LOK SABHA
UNSTARRED QUESTION NO. 2718
ANSWERED ON 16.12.2025
IMPACT OF EV ON TAX REVENUE
2718. SMT. RACHNA BANERJEE:
Will the Minister of HEAVY INDUSTRIES be pleased to state:
(a) whether the Government is aware that the cost of EV is more compared to equivalent ICE
vehicles;
(b) the projected annual saving on crude oil imports and foreign exchange reserves at different stages
of EV penetration i.e. 10%, 30% and 50% EV sales share; and
(c) the manner in which the Government plans to compensate for the anticipated loss in tax revenue
from reduced fossil fuel sales i.e. excise duty and State VAT on petrol/diesel?
ANSWER
THE MINISTER OF STATE FOR HEAVY INDUSTRIES
(SHRI BHUPATHIRAJU SRINIVASA VARMA)
(a): The total cost of ownership (i.e. Upfront cost as well as Operational cost) is relevant while
comparing equivalent cost of EV and ICE vehicles. The upfront cost of electric vehicles is currently
higher than equivalent ICE vehicles.
(b) & (c): No such study/assessment has been carried out by Ministry of Heavy Industries.
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