Infrastructure—covering roads, highways, railways, airports, ports, and urban development—acts as the backbone of an economy by enhancing connectivity, reducing logistics costs, and promoting industrial activity, they pointed out.
02 Feb 2025 | 2033 Views | By Shahkar Abidi
The Union Budget 2025 announced on Saturday managed to maintain a healthy budgetary outlay towards capital expenditure at Rs 11.2 trillion (Rs 11.2 lakh crore) in FY2026, as compared to Rs 10.2 trillion (Rs 10.2 lakh crore) in FY2025, implying a growth of 10.1% YoY. Furthermore, the government’s focus on ...
This is an Autocar Pro Plus article. Subscribe to continue reading.
The Union Budget 2025 announced on Saturday managed to maintain a healthy budgetary outlay towards capital expenditure at Rs 11.2 trillion (Rs 11.2 lakh crore) in FY2026, as compared to Rs 10.2 trillion (Rs 10.2 lakh crore) in FY2025, implying a growth of 10.1% YoY. Furthermore, the government’s focus on fiscal consolidation, despite continuing its capex thrust, augurs well for the economy, claimed Ashish Modani, Senior Vice President & Group Head, ICRA Limited.
"The Union Budget 2025 has made substantial allocations and introduced several initiatives to boost the infrastructure sector in India. Healthy capital expenditure, focus on transportation and urban development, are expected to support the country's economic growth and development" Modani remarked. "The successful implementation of these projects will be crucial in achieving the desired outcomes and ensuring sustainable economic growth in the coming years"
The development seems significant considering the fact that a strong thrust on infrastructure investment is crucial for India's economic growth and development. Infrastructure—covering roads, highways, railways, airports, ports, and urban development—acts as the backbone of an economy by enhancing connectivity, reducing logistics costs, and promoting industrial activity. It helps drive the demand for automobiles, construction equipment and allied products.
Dheeraj Hinduja, Executive Chairman, Ashok Leyland said, "The budget prioritizes extensive national infrastructure development and accelerates the digitization of the economy. Continuous government investments in infrastructure are set to fuel sustained economic growth. Additionally, the government's strong commitment to green mobility is expected to create new avenues for innovation and growth across the country".
He added that the launch of the National Manufacturing Mission will support the sector by providing crucial policy backing, execution plans, and a governance and monitoring framework. "With strategic investments in skilling, digitization, healthcare, education, agriculture, and electrification, the budget aims to shape India’s economic trajectory in the years ahead. Furthermore, it reinforces our commitment to clean energy vehicles, contributing to a greener, cleaner future as part of the national mission to achieve net-zero carbon emissions.” Hinduja added.
Likewise, Girish Wagh, Executive Director, Tata Motors is of the view that the union budget 2025 lays out a clear roadmap for long-term transformation, driving India closer to its vision of a ‘Viksit Bharat’ with progressive policies and reforms that foster modernization, economic growth, and inclusive development. "The continued allocation of over Rs. 11 lakh crore in capital expenditure, alongside targeted initiatives to boost consumption, support ‘Make in India’, and promote agricultural growth, is set to create a more dynamic economic environment" Wagh stated, adding that the removal of basic customs duties on key materials for battery manufacturing is a strategic move to boost domestic EV production, foster a sustainable ecosystem, and drive India's transition to a greener economy.
"As infrastructure projects gain momentum and consumption picks up, improved roads, connectivity, and logistics will undoubtedly drive increased demand for freight and commercial transport solutions driven by both domestic demand and broader economic recovery." he continued.
Seconding Wagh; Vinod Aggarwal, MD & CEO, VECV noted that the introduction of the National Manufacturing Mission and the emphasis on Clean Tech Manufacturing, including National Critical Minerals Mission, particularly for EV batteries, motors, controllers, and high-voltage transmission equipment, will provide a significant boost to ‘Make in India’ efforts.
The rationalization of custom duties on key raw materials and the reduction of inverted duty structures will also enhance cost-effectiveness in domestic manufacturing. The duty exemption on capital goods for EV battery manufacturing is a welcome step toward accelerating India's electric mobility transition.
"Furthermore, adjustments in GST rates, incentives for electric vehicle adoption and import duties on components will reshape the industry’s landscape. Increased allocations for infrastructure development, particularly in roads and transportation, will directly fuel demand for commercial vehicles.
Additionally, budgetary provisions for working capital support, technology upgradation funds, and easier credit access will play a crucial role in strengthening the MSME ecosystem, ensuring its long-term growth and sustainability" Aggarwal explained.
Similarly, Mahesh Babu, CEO of SWITCH Mobility stated that India's FY25-26 budget targets economic growth with a 4.4% fiscal deficit and income tax cuts, including exemptions for individuals earning up to Rs12 lakh boost disposable income, consumer spending will benefit sectors like commercial vehicles with higher logistics demands. "The budget also simplifies duties and taxes to support MSMEs, startups, and entrepreneurship." Babu said.
According to him, the exemption of customs duties on lithium-ion batteries and critical minerals such as cobalt, zinc, and lead represents a crucial step in reinforcing India’s electric vehicle (EV) ecosystem.
Sandeep Singh, MD, Tata Hitachi also called it an overall 'good budget', with the focus on infrastructure with increases in the outlays for capex, urban development and Jal Jeevan Yojana overall positive for CE.
Yatin Gupte, Chairman & Managing Director, Wardwizard Innovations & Mobility Ltd, said, "We welcome the policies stated in Union Budget 2025-26 by the Finister, which gives a strong push towards EV adoption, accelerating the development India’s electric vehicle ecosystem. The reduction in customs duty on lithium and other important raw materials will significantly lower input costs for lithium-ion battery manufacturing, making EVs more affordable to consumers while boosting domestic production.
The introduction of a national manufacturing mission for clean tech industries is another commendable move. By strengthening the ecosystem for EV batteries, motors, and controllers, this initiative will accelerate India’s transition to sustainable transportation. The recognition of MSMEs as the ‘2nd engine’ of economic growth in the Union Budget 2025 will boost sectoral confidence. The fiscal policies stated to support MSMEs will have a multiplier effect on various sectors, including accelerating India’s e-mobility revolution. We are confident that the expanded tax bracket will enhance the purchasing power of the middle class, which will positively impact EV industry in India."