EV Discounts Tell Tales

December 16, 2025

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Good Morning. The goods and services tax (GST) cuts were meant to spur spending and to make goods, including cars, cheaper. But they have slightly derailed the trajectory of electric vehicle (EV) sales in India. As petrol and hybrid cars suddenly look cheaper and more attractive, EV dealers are sitting on unsold inventory and offering record discounts.

India’s equity benchmarks ended almost flat on Monday. The BSE Sensex closed at 85,213.36, 54.30 points or 0.06% lower. The NSE Nifty50 closed at 26,027.30, 19.65 points or 0.08% lower.

In other news, India’s trade deficit narrows to five month low. Meanwhile, India and France have made a deal to revise their treaty signed in 1992.

Record EV Discounts Surge As GST Cuts Shift Demand To Petrol, Hybrids

What

The government’s long-awaited GST overhaul has turbocharged demand for internal combustion engine (ICE) cars, leaving EVs with building inventory and the steepest discounts for the segment this year. Top volume drivers, namely Tata Motors, JSW MG Motor India and Mahindra & Mahindra, and their dealers are discounting aggressively, with offers on popular models exceeding Rs 1 lakh.

Dealers report a widening gap between the modest, model-specific discounts on ICE vehicles and the across-the-board markdowns now hitting EVs. December is always a deal season, but this year, the scale and spread of electric car incentives stand out sharply. According to Ravi Bhatia, president of JATO Dynamics India, December discounts on electric cars are “significantly higher” than last year.

Why

The pivot began on September 22, when GST on sub-4-metre petrol, hybrid, and CNG cars dropped from 28% to 18%, and the compensation cess was scrapped. As a result, conventional cars became more affordable, while EVs remained at 5% GST, widening the price gap between EVs and ICE vehicles. That rebalanced equation, combined with a surge in production of Rs 10–20 lakh EV models, pushed buyers back toward familiar combustion choices. EV penetration fell from 5.6% in August to just 3.4% in October, its lowest point this fiscal.

The festive season kept overall demand strong, yet EVs failed to deliver the usual seasonal spike—unlike ICE models, which surged. Analysts say consumers are reassessing total cost of ownership at a time when ICE and hybrid models are getting feature upgrades and sharper pricing.

Why It Matters

The near-term EV picture is complicated. Yes, year-to-date retail sales have already surpassed FY25’s full-year volumes, and penetration has doubled to 3.8% year-on-year. But if the post-GST slump persists, it risks eroding the strong momentum built earlier in FY26. For automakers, rising inventories and heavier discounting threaten margins at a time when capital expenditure on new EV platforms is climbing.

And for investors, it signals a market entering a more volatile transition phase—caught between early-adopter enthusiasm and mass-market pragmatism. Anurag Singh, Advisor, Primus Partners says, “While the long-term outlook remains strong, the market will inevitably face a few weak months or quarters.”

India Energy Week returns for its 4th edition from 27–30 January 2026 in Goa, held under the patronage of the Ministry of Petroleum & Natural Gas and co-organised by FIPI and DMG Events.

As India advances its role in the global energy transition, the event will bring together policymakers, industry leaders and innovators to shape practical pathways toward a secure, sustainable and affordable energy future.

IEW 2026 will spotlight India’s leadership in balancing energy access with decarbonisation, while showcasing strategic investments, emerging technologies and global partnerships driving the next era of energy progress.

India’s GCC Boom: Why Global Firms Can’t Stop Expanding Here

Global capability centres (GCCs) are now a well-understood phenomenon. India has close to 1,800 global capability centres right now, and it is projected that by 2030, it will reach 2,400. A few such centres are coming up in the country every week. What has led to this acceleration?

Paul Jeruchimowitz, Senior Managing Director and GCC Practice Lead, Accenture, believes that the role that technology plays in reinventing all value chains, business processes or functions is among the drivers of this acceleration.

While companies believed that proximity was required for certain functions in a company. Now, that is changing, especially post-pandemic. “So now you have the combination of AI-first processes powered by technology, proof that proximity is not required in all the spaces where we thought it once was,” said Jeruchimowitz.

GCCs are making cultural immersion in a company a two-way street rather than it being headquarters-centric.

“For a long time, we focused on, how to create the corporate headquarters culture here in the GCC? Well, now there's the reverse cultural immersion of saying in the GCC, we've created this environment where technology and data and process experts and ecosystem partners are working together and actually in a more collaborative way than you'll find back at global headquarters that still operate perhaps in functionally siloed ways,” said Jeruchimowitz.

How can GCCs be empowered to drive business growth and increase cost effectiveness?

This series is presented in collaboration with Accenture India.

$24.53 billion

That’s the value of India’s merchandise trade deficit in November 2025, a five-month low, based on government export-import data showing merchandise exports of about $38.13 billion and imports of about $62.66 billion. Reduced gold, oil and coal imports contributed to narrowing the gap. 

October’s merchandise trade deficit: $41.68 billion

November’s figure is significantly lower than what a Reuters poll of economists predicted–$32 billion. 

Future: Commerce secretary Rajesh Agrawal said India has managed to maintain exports to the United States despite higher tariffs, and indicated that the two countries are close to finalising a framework trade agreement. Indian officials, led by Agrawal, met US Deputy Trade Representative Rick Switzer in New Delhi last week to discuss bilateral trade. 

Tariff Threat Spurs Talks

India is exploring a preferential trade deal with Mexico to cushion the impact of planned tariff hikes that could hit about $2 billion of Indian exports, Trade Secretary Rajesh Agrawal said. Technical discussions are underway following an online meeting this month between Agrawal and Mexico’s Vice Minister Luis Rosendo.

Context: Mexico’s Senate last week approved tariff increases of up to 50% on imports from several countries, including India, starting next month—a move analysts say is aimed at appeasing the US ahead of a regional trade agreement review next year. This move could affect India’s carmakers.

Setting: India exported $5.73 billion of goods to Mexico in 2024, led by vehicles, auto parts, metals and textiles. Preliminary estimates suggest automobiles, steel and textiles could bear the brunt of the impact.

WPI Deflation Narrows

India’s Wholesale Price Index (WPI) inflation rose to minus 0.32 per cent in November from a 27-month low of minus 1.21 per cent in October, data from the Commerce Ministry showed. Deflation eased as prices of food articles, minerals, fuel and electricity moved higher, though several categories remained in negative territory.

By The Numbers: Food inflation stood at minus 2.60 per cent versus minus 5.04 per cent in October, reflecting higher prices despite continued deflation. Vegetables remained sharply cheaper, while milk and protein-rich items, such as eggs, meat, and fish, saw faster price increases. Fuel prices rose 1.03 per cent, aided by higher electricity tariffs.

Outcome: The prices of manufactured products dipped marginally. Meanwhile, retail inflation, measured by Consumer Price Index (CPI), rose to 0.71 per cent in November from 0.25 per cent in October, driven mainly by higher food and fuel prices.

Bonjour, Tax Reset

India and France have agreed to overhaul their 1992 double taxation avoidance agreement, revising dividend taxes and expanding New Delhi’s rights to tax French investors.

Fast Facts: Under the new treaty, India will levy a 5% tax on dividends paid to French companies holding at least 10% in an Indian firm, down from 10%. Smaller investors will face a higher 15% rate. India will also gain the right to tax capital gains on all equity sales by French investors, removing an earlier ownership threshold. The revised pact scraps the most favoured nation clause, which allowed France to claim better tax rates if India struck a more favourable deal with another country.

Next Steps: Officials say the changes align the treaty with global tax norms and could encourage fresh bilateral investment.

GST Fuels Credit

India’s GST rationalisation in September 2025, ahead of the festive season, helped lift retail credit demand, pushing the Credit Market Indicator (CMI) to 99 in the July–September quarter from 98 in the previous quarter, TransUnion CIBIL said. Improved affordability boosted borrowing, particularly in vehicle finance and consumer durables, with the demand-side CMI rising to 95 from 93 a year earlier.

The Lead: Credit supply also strengthened, with the supply CMI climbing to 97 from 91, led by secured products such as home, auto and consumer durable loans. Semi-urban and rural regions accounted for 61% of total credit supply, while growth among younger and new-to-credit borrowers accelerated.

Setup: Asset quality remained broadly stable, though early signs of stress emerged in microloans against property and small-ticket housing loans, warranting closer monitoring, the report said.

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The Markets Slip Further On Weakening Cues And Outflows

On Episode 752 of The Core Report, financial journalist Govindraj Ethiraj talks to Ajay Srivastava, Founder of the Global Trade Research Initiative (GTRI) as well as Ajay Kedia, Director, Kedia Advisory.

  • The markets slip further on weakening cues and outflows.

  • The rupee hits fresh lows on absence of trade deal.

  • Why is Mexico hitting India with tariffs, and a look at Indian exports at a 10-month high.

  • Copper prices are hitting records as metal traders shift focus, assessing the impact.

  • And the nuts and bolts of how GCCs are coming up in India.

✍️ Zinal Dedhia, Kudrat Wadhwa, Shubhangi Bhatia | ✂️ Rohini Chatterji | 🎧 Joshua Thomas

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