Industry leaders in the automotive sector have welcomed the Union Budget 2025-26 for its emphasis on EV manufacturing, clean technology, and support for the rural economy, noting that it could help increase domestic production, lower costs, and drive India's progress toward becoming a global leader in electric mobility and sustainable energy.
01 Feb 2025 | 3225 Views | By Autocar Pro News Desk
The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman, has drawn widespread praise from automotive industry leaders for its focus on strengthening India's electric vehicle (EV) ecosystem, promoting domestic manufacturing, and fostering innovation in clean technology. The budget's comprehensive approach spans multiple interconnected sectors, from direct support for EV ...
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The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman, has drawn widespread praise from automotive industry leaders for its focus on strengthening India's electric vehicle (EV) ecosystem, promoting domestic manufacturing, and fostering innovation in clean technology. The budget's comprehensive approach spans multiple interconnected sectors, from direct support for EV manufacturing to broader economic measures that could boost automotive demand.
As part of a comprehensive Clean Tech manufacturing support program, the budget introduced customs duty exemption on 35 capital goods for EV battery manufacturing, alongside support for domestic manufacturing of motors, controllers, and other critical components. This systematic approach has been widely welcomed by industry leaders.
Girish Wagh, Executive Director of Tata Motors, called it "a strategic move to boost domestic EV production, foster a sustainable ecosystem, and drive India's transition to a greener economy." The integration of EV manufacturing with the Clean Tech manufacturing program particularly emphasizes building the entire EV ecosystem, including battery recycling and charging infrastructure development.
Naveeth Menon, VP of Sales & Marketing Operations at BAXY Mobility, emphasized the broader impact: "The budget introduced groundbreaking initiatives to accelerate the shift toward lithium-ion batteries in the EV sector. Tax exemptions for lithium-ion battery manufacturing are set to enhance local production capabilities, positioning India as a global hub for EV manufacturing."
The impact on battery manufacturing costs could be substantial, according to Dinesh Arjun, CEO and Cofounder of Raptee.HV. "Given that batteries make up 30-40% of an EV's cost, this move will make EVs more affordable and accessible to consumers, driving mass adoption across two-wheelers, three-wheelers, and four-wheelers alike," he noted.
Gaurav Dolwani, CEO of LICO Materials, added depth to the battery recycling perspective: "The exemption of cobalt powder, lithium-ion battery scrap, and other critical minerals from Basic Customs Duty, along with the reduction in import duty for lithium scrap, is a significant step toward strengthening India's battery recycling ecosystem and fostering a sustainable circular economy."
Uday Narang, Founder and Chairman of Omega Seiki Pvt. Ltd., emphasized the broader impact: "By eliminating these duties, the government is not only reducing the cost of production for manufacturers but also accelerating the transition towards more affordable and sustainable technologies."
The introduction of the Critical Mineral Mission has been particularly well-received. Anagh Ojha, Co-founder & CTO at Urja Mobility, explained its significance: "The Mission aims to enhance domestic production, overseas acquisition, and recycling of essential minerals like lithium, cobalt, and nickel—crucial for battery manufacturing."
Vikram Handa, MD of Epsilona Advanced Materials, praised the comprehensive approach: "The exemption of crucial materials like cobalt powder, lithium-ion battery scrap, lead, zinc, and 12 other critical minerals from Basic Customs Duty is a significant step. Further incentivizing domestic production is the inclusion of 35 additional goods for EV battery manufacturing in the exempted capital goods list."
Pratik Kamdar, CEO & Co-Founder of Neuron Energy, added that "The FM's plan to exclude lithium-ion batteries from basic customs duty will increase the cost-effectiveness and flexibility of the supply chain."
Rajat Verma, Founder & CEO of LOHUM, described the budget as "a watershed moment in India's journey toward clean energy sovereignty," particularly praising the "elimination of import duties on lithium-ion battery scrap, cobalt powder, and an array of critical mineral wastes" as creating "unprecedented opportunities."
The budget's agricultural and rural economy initiatives, including the Prime Minister Dhan-Dhaanya Krishi Yojana covering 100 districts and benefiting 1.7 crore farmers, are expected to boost rural demand for two-wheelers and entry-level vehicles. Rahul Mishra, Partner at Kearney, noted that "The change in tax slab will definitely improve affordability and improve the market for two wheelers and mass market products. The overall support towards agricultural sector, the rural economy, skill development, and the support to the MSME sector will further make the automotive industry strong both on the demand side as well as on the supply side."
Sunjay J Kapur, Chairman of Sona Comstar & Deputy Chairman of CII Northern Region, praised the urban development initiatives: "The ₹1 lakh crore Urban Challenge Fund and enhanced infrastructure support will catalyse economic activity and improve liveability in cities. Initiatives like Atal Tinkering Labs, National Centres of Excellence, and IIT expansion will equip India's youth with future-ready skills."
The budget's MSME initiatives are particularly significant for the auto components sector, which comprises a substantial portion of India's MSME base. The doubling of credit guarantee cover to ₹10 crore and introduction of new classification criteria provide greater flexibility for growth. Ayush Lohia, CEO of Lohia Auto, welcomed these initiatives: "The customized credit cards with a limit of Rs 5 lakh will provide much-needed access to capital for micro industries."
Bhuvneshwar Pal Singh, Managing Director & CFO of Maxvolt Energy, highlighted the broader implications: "The focus on cleantech manufacturing through the National Manufacturing Mission and the Export Promotion Mission reinforces India's commitment to global competitiveness."
Akshat Khetan, Founder of AU Corporate Advisory and Legal Services, emphasized that "By providing tax exemptions and customs duty reductions, the budget offers the right incentives for businesses to scale up and invest in India's manufacturing sector, positioning it for long-term growth and global competitiveness."
Sumedh Battewar, Co-founder and CBO of EMotorad, highlighted the importance of addressing skill development in the EV sector: "We have witnessed a high demand for skilled talent making way for a wave of opportunities for youth to apply their expertise in the EV sector. However, there is a knowledge transfer gap that needs to be addressed through focused training, education, and awareness programs."
The budget's commitment to research and innovation has received particular attention. Krishna Vij, VP at TeamLease Digital, highlighted that "The government's plan to establish a dedicated ₹20,000 crore Fund of Funds for DeepTech startups, alongside 10,000 research fellowships at IITs and IISc over the next five years, is a decisive step toward strengthening India's tech ecosystem."
Sumit Kumar, Chief Strategy Officer at TeamLease Degree Apprenticeship, praised the comprehensive approach to skill development: "The establishment of five National Centres of Excellence for Skilling will help bridge the skill gap, increase employability, and prepare youth for emerging industries, while global skilling partnerships will enable Indian talent to access international opportunities."
The budget's consumer-focused initiatives, including complete tax exemption up to ₹12 lakh income under the new tax regime (₹12.75 lakh for salaried taxpayers), are expected to boost automotive demand. Jyoti Malhotra, Managing Director of Volvo Car India, noted: "The Union Budget 2025-26 appears to be focused on stimulating consumer spending and fostering economic growth. Measures such as tax rationalization aim to increase disposable income and boost consumption."
Niranjan Nayak, MD of Delta Electronics India, emphasized the technology focus: "The emphasis of the government on green energy, EV infrastructure, AI-led innovation, and digital transformation closely resonates with Delta's aim to deliver energy-efficient, smart solutions that power the future."
While the industry response has been largely positive, leaders emphasize the importance of effective implementation. Akshit Bansal, Founder & CEO of Statiq, pointed out that while the budget's EV initiatives are promising, "a revision in the GST structure for charging infrastructure is still needed."
The comprehensive nature of the budget's approach – combining direct support for EV manufacturing, broader economic stimulus through tax reforms, rural economy boost, and MSME support – creates multiple pathways for automotive sector growth. As Dev Arora, Founder & CEO at Alt Mobility, concluded: "Budget 2025 is a game-changing moment for the electric vehicle sector... setting India on a trajectory to become a global leader in EV and clean energy solutions, fostering long-term growth and a cleaner, greener future."