Copyright © HT Digital Streams Limit all rights reserved. Sumati Kohli 4 min read 26 Sept 2025, 01:27 IST India’s transport sector is an economic key stone and a significant and growing source of carbon emissions. (Mint) Summary India’s GST reform has linked rates on ice vehicles to their length and engine displacement. An additional carbon releases parameter can encourage cleaner mobility. Many countries have done this successfully. India must also work against the Net Nulwelwit by 2070, with the recent rationalization of taxes on goods and services (GST), taxes on cars have undergone a structural reform. While domestic combustion car vehicles were previously subject to 28% GST (with an extra strike that ranged for some categories), while electric vehicles (EVs) paid a special rate of 5%, the tax was restructured for the former to link the rates to two parameters: engine displacement and vehicle length. This reform is expected to boost the automotive industry. But policymakers can build on these changes by also linking GST vehicle emissions and thus utilizing the indirect tax regime of India, not only to achieve the economic objectives, but also to promote India’s ambitious climate goals. India’s transport sector is an economic key stone and a significant and growing source of carbon emissions. In 2024, an average of 71,000 vehicles were registered daily in India. Battery-powered electric vehicles (EVs), subject to 5% GST among the previous and current regimes, accounted for only 7% of these registrations. In the midst of lasting barriers to the widespread EV recording in India, including high pre -cost, consumer skepticism and a lack of sufficient charging car infrastructure, ICE vehicles in the foreseeable future will make up a large part of the new purchases. As the government strives to accelerate the adoption of the EV to reach net zero emissions by 2070, carbon emissions along with the engine displacement and vehicle length in determining GST rates can help promote the uptake of cleaner vehicles. Past ICCT research on passenger cars in India found that cars with similar engine displacement have very varying emissions. For example, cars with engine displacement below 1200cc – a key threshold in the new GST rate structure – produce emissions between 85 g/km and 149 g/km. Vehicle length was also found to be an insufficient indication of carbon emissions. For example, emissions under cars with a vehicle length of no more than 4 meters – another important threshold – were found to differ between 85 g/km and 161g/km. These findings suggest that the new GST structure for cars misses the opportunity to promote clean mobility more directly by charging taxes that match the emissions of the vehicle. An emission-linked GST structure for vehicles can offer three important benefits to achieving the climate goals of India. First, studies by ICCT found that tax on vehicles could serve as an important policy lever to affect the acceptance of low-emission ice technologies among consumers. Countries such as France, Ireland, Germany, Singapore and Thailand have adopted vehicle tax structures linked to emissions. The records of these countries show that such policies can support the survey of vehicles with a lower radiation. After France adopted its emission-linked fee structure for passenger cars in 2008, the type of approved emissions of the new passenger car fleet fell by 9 g/km (about 6%), which was almost twice the reduction in the rest of the EU. Meanwhile, certain vehicles with a higher radiation saw that it was a decline in sales. In the Netherlands, carbon-based vehicle tax led to a 6.3 g/km emission reduction between 2005 and 2012. Secondly, a tax-linked tax structure can be designed to be charged on vehicles with high emission vehicles to offer discounts or subsidies for purchasing vehicles with low and zero emission. Such a system, commonly known as a fairy asset (or bonus -malus) program, can help the government to encourage the survey of vehicles with a lower radiation, while reducing the fiscal burden of incentives on the treasure trove. In France, sales of vehicles with a lower emission jumped by about 80% after a FeeBate system was introduced in 2008; Thanks to the careful policy design, France’s program achieved a positive incoming from 2014 to 2022. In Sweden, registrations of new EVs have risen to the launch of a bonus-Malus scheme in 2018. Third, as manufacturers have an economic stake in increasing sales and the profits of an emission-linked GST framework can serve as a policy delay of manufacturers of manufacturers to improve low-emission to adopt low-emission technologies and to improve manufacturers of the manufacturers to adopt low-emission technologies and improve environmental performance. Vehicles. As India strives to reach net-zero emissions by 2070, the current GST structure can be supplemented-based on the engine displacement and vehicle length with an emission-linked tax framework. The government has already taken a critical step towards the distinction of vehicle taxes for stimulating the automotive industry and promoting cleaner mobility. With a few adjustments, it can encourage ICE vehicles consumers to opt for lower emissions and vehicle manufacturers to invest in cleaner and more fuel efficient. The author is a researcher at the International Council for Clean Transportation (ICCT). 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