New Delhi, February 1, 2025: Finance Minister Nirmala Sitharaman presented the Union Budget today, emphasizing key reforms to accelerate the growth of emerging industries. A major focus remains on strengthening India’s electric vehicle (EV) sector, with agriculture, MSMEs, investments, and exports identified as the primary drivers of economic growth. To support the auto industry, the government has introduced initiatives like the Export Promotion Mission and policy reforms aimed at encouraging EV manufacturing.
Boost to Battery Manufacturing
Sitharaman announced a proposal to expand domestic lithium-ion battery production by adding 35 additional capital goods categories for EV battery manufacturing. Additionally, the Basic Customs Duty (BCD) on select capital goods required for battery production will be reduced, easing manufacturing costs and enhancing domestic supply chains.
Key Budget Highlights for the Auto Sector
- EV Component Development: A National Manufacturing Mission will be established to enhance local production of EV batteries, motors, and controllers.
- PM eDrive Scheme: Allocation increased to INR 40 billion from INR 39 billion last year (includes FAME II incentives).
- PM eBus Scheme: Budget raised to INR 5.1 billion, a significant increase from INR 0.2 billion last year.
- PLI Incentives:
- Auto & Components: INR 28.2 billion, up from INR 3.5 billion last year.
- ACC Batteries: INR 1.6 billion, up from INR 0.2 billion last year.
Customs Duty Revisions
- Motorcycles (Below 1600cc): Duty reduced from 50%/25%/15% to 40%/20%/10%
- Cars: Duty cut from 125% to 70%, making imports more affordable.
Infrastructure Spending
- Ministry of Roads: Budget remains flat YoY at INR 2.7 trillion.
- NHAI Allocation: Up 1% YoY to INR 1.7 trillion, falling below industry expectations for commercial vehicle OEMs.
Tax Relief and Its Impact on EV Sales
A key budget highlight was Sitharaman’s announcement:”I am happy to announce that there will be no income tax payable on earnings up to ₹12 lakh.” This tax relief boosts disposable income for middle-class salaried individuals, potentially increasing EV sales in the near future.
Industry Post Budget Reactions
Shailesh Chandra, President, SIAM
“We welcome this budget which is focused on long term sustained economic growth. The specific focus on rural prosperity and agriculture, coupled with reforms in the Personal Income Tax, is likely to have a positive effect on the Auto Industry, and will help in creating demand.
As the Auto Industry transits into cleaner powertrains, in line with the Hon’ble PM’s vision on sustainable mobility, it will specifically benefit from the National Manufacturing Mission, which supports clean tech manufacturing for batteries, motors and controllers. Furthermore, the exemption of critical minerals (e.g. Cobalt, Lead, Zinc etc.), scraps of Lithium-ion battery, and 35 additional capital goods from customs duty, will help create a strong EV ecosystem in the country.
The Export Promotion Mission and support for integration with global supply chains are critical initiatives that will enable Indian manufacturers to expand export footprints, and align with global supply chains.
The Auto Industry is also thankful to the Government for creating a high-level committee for regulatory reforms, aimed at reviewing regulations, certifications, licenses, and permissions, as this will certainly help in ease of doing business in our sector.”
Mr. Vinod Aggarwal, MD & CEO, VECV
“We congratulate the government on presenting a forward-looking and growth-oriented Union Budget 2025–26. The budget reaffirms the government’s strong commitment to strengthening India’s manufacturing sector and accelerating the transition to clean and sustainable mobility while bolstering India’s economic resilience”.
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.
At VECV, we remain committed to advancing sustainable mobility solutions and contributing to India’s vision of a self-reliant, cleaner, and more efficient transportation ecosystem. The budget outlines a plan for promoting sustainable transportation through integrated infrastructure development initiative. Overall, the Union Budget 2025 reflects a comprehensive approach to stimulate inclusive economic growth through targeted investments in critical sectors that are essential for India’s development trajectory.”
Girish Wagh, Executive Director, Tata Motors
“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. 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.”
Mahesh Babu, CEO of SWITCH Mobility
“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 ₹12 lakh boost disposable income, consumer spending benefiting sectors like commercial vehicles with higher logistics demands. The budget also simplifies duties and taxes to support MSMEs, startups, and entrepreneurship.”
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. This move will enhance the competitiveness of the EV industry, helping it to grow more rapidly and become a key player in the global market. It accelerates India’s progress toward Aatmanirbharta in clean energy and sustainable mobility solutions. These measures are expected to reduce the overall cost of EVs, making them more affordable for consumers, which directly supports the government’s ambitious target of achieving 30% EV adoption by 2030.”
“The budget’s focus on establishing a National Manufacturing Mission aligns with our goal of engineering in India for ‘Make in India’ and enhancing the nation’s self-reliance in manufacturing. This initiative is poised to attract investments and improve efficiency, positioning Indian companies as globally competitive players.
The establishment of five National Centres of Excellence for Skilling is a pivotal move in building a future-ready workforce. This initiative resonates with our commitment to engineering a better future for India’s youth through investment in in-demand training programs across Industry 4.0, IoT, and advanced manufacturing, and collaborating with state governments to upgrade ITIs into technology hubs.
Additionally, the allocation of ₹500 crore for a Centre of Excellence in Artificial Intelligence for education underscores the importance of fostering innovation and research in AI, which will benefit both the education sector and the broader technology landscape.”
Warren Harris, CEO & MD, Tata Technologies.
The Automotive Component Manufacturers Association of India (ACMA) applauds the Hon’ble Finance Minister, Smt. Nirmala Sitharaman, for presenting a progressive and growth-oriented Union Budget 2025-26. The budget reflects the government’s strong commitment to strengthening India’s manufacturing sector, fostering innovation, promoting exports and accelerating the transition to clean mobility.
Shradha Suri Marwah, President, ACMA
Boosting the Auto Component Industry & MSMEs
The budget’s focus on MSMEs as a key driver of economic growth, with enhanced credit guarantees and revised classification criteria, is a welcome move for the auto component sector. The increase in credit guarantee cover for micro and small enterprises from ₹5 crore to ₹10 crore will encourage investments in technology and R&D, crucial for the industry’s global competitiveness.
Accelerating ‘Make in India’ & Clean Mobility
The National Manufacturing Mission and the emphasis on Clean Tech Manufacturing, particularly for EV batteries, motors, controllers, and high-voltage transmission equipment, will provide a much-needed boost to the industry’s localization efforts. ACMA appreciates the government’s initiatives to support the development of a robust EV supply chain and promote sustainable mobility solutions.
Strengthening Supply Chains & Export Competitiveness
The introduction of BharatTradeNet and the Export Promotion Mission will help integrate India’s auto component sector into global supply chains. ACMA welcomes the government’s decision to support MSMEs in overcoming non-tariff trade barriers and facilitate easier access to export credit, enhancing the sector’s global competitiveness.
Customs Duty Rationalization & Taxation Reforms
The industry appreciates the rationalization of customs duties on key raw materials and the reduction of inverted duty structures, which will make domestic manufacturing more cost-effective. The duty exemption on capital goods for EV battery manufacturing is a strong step toward enabling India’s transition to electric mobility.
Speaking on the Budget, Shradha Suri Marwah, President, ACMA, said,
“The Union Budget 2025-26 is forward-looking and growth-centric, reinforcing the government’s commitment to strengthening India’s manufacturing sector and driving the transition to cleaner mobility solutions. The focus on MSMEs, innovation, exports and supply chain resilience will provide a strong impetus to the auto component industry. Further, the proposals for personal Income Tax will put more money in the hands of people thus fuelling consumption leading to economic growth.“The budget announcements are a significant boost to India’s growth story. The tax bonanza for the middle class, with zero income tax liability for those with annual income up to Rs 12 lakh, will increase disposable income and drive consumption. The exemption of lithium batteries from the Basic Custom Duty will give a fillip to the electric vehicle industry and encourage sustainable development.
H S Bhatia, Managing Director, Daewoo India
The government’s emphasis on education and innovation, with initiatives like 50,000 Atal Tinkering Labs and IIT expansion, will drive India’s innovation boom and create a skilled workforce. These initiatives will have a positive impact on the economy and society, and we look forward to contributing to this growth story.”
Yatin Gupte, Chairman & Managing Director, Wardwizard Innovations & Mobility Ltd.
“We welcome the policies stated in Union Budget 2025-26 by the Hon’ble Finance Minister, 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.”
Rashi Agarwal, Co-founder & Chief Business Officer, Zypp Electric
“The Union Budget 2025 reaffirms India’s commitment to fostering entrepreneurship and empowering the gig economy. The government’s decision to establish a new ‘Fund of Funds for Startups’ with an additional ₹10,000 crore infusion will provide a significant boost to innovation and job creation. This initiative, coupled with the dedicated support for 5 lakh women, SC, and ST first-time entrepreneurs, will drive inclusive growth and encourage diverse participation in the startup ecosystem.
Furthermore, introducing identity cards and healthcare coverage for gig workers under PM-Jan Aarogya Yojana is a landmark move towards recognizing and securing the livelihoods of millions in the gig economy. These measures are a game-changer at Zypp Electric, where our fleet is powered by thousands of gig workers enabling sustainable last-mile deliveries. Access to social security and financial support will empower our rider partners, enhance workforce stability, and accelerate the adoption of green mobility solutions across India. We welcome these forward-thinking initiatives, which will not only strengthen India’s entrepreneurial landscape but also ensure social security for the workforce driving the nation’s digital and mobility revolution.”
Hyder Ali Khan, CEO & Director, Godawari Electric Motors
The Union Budget’s focus on cleantech and self-reliance is a major boost for India’s EV industry, directly benefiting Godawari Electric Motors. The National Manufacturing Mission supports local EV battery and solar panel production, reducing import dependency and enhancing cost efficiency.
The establishment of five National Centres of Excellence for Skilling will strengthen the EV workforce, while the exemption of Basic Customs Duty on critical minerals like cobalt and lithium-ion batteries ensures a steady supply of key raw materials for domestic manufacturing.
Additionally, the increased tax relief of up to ₹12 lakh will enhance consumer consumption, accelerating EV adoption and reinforcing sustainable mobility adoption across segments.
Ashok Vashist, Founder and CEO, WTiCabs
The expansion of regional connectivity under the UDAN scheme, with 120 new destinations, presents a significant opportunity for WTi Cabs/people mobility Industry to enhance its airport transfers, intercity travel, and last-mile connectivity. Simultaneously, customs duty adjustments supporting EV manufacturing—including exemptions on 35 additional capital goods—will lead to improved technology and lower vehicle acquisition costs. These initiatives will further strengthen WTi’s/ people mobility industries sustainability goals by enabling a smoother transition to electric mobility while leveraging solar-powered EV charging infrastructure, ensuring an eco-friendly and cost-effective transportation network.
Amit Jain, CEO and Co-Founder, CarDekho Group
“We extend our heartfelt congratulations to the Hon’ble Finance Minister for presenting a landmark Union Budget 2025-26 that exemplifies a bold and forward-thinking vision for sustainable growth and a Viksit Bharat. This budget not only charts a clear path toward long-term prosperity but also introduces several key initiatives that are poised to drive growth across various sectors, particularly in the automotive industry.
First and foremost, the changes in tax slabs under the new tax regime are expected to significantly boost consumer demand, thereby enhancing the purchasing power of individuals. This shift will undoubtedly have a positive impact on overall auto sales in India, stimulating growth in the sector.
The Budget’s special focus on the electric vehicle (EV) ecosystem is a noteworthy step towards advancing sustainable mobility. The inclusion of 35 additional capital goods for EV battery manufacturing under the exemption list is a game-changer. Additionally, the exemption of scrap materials such as lithium-ion batteries, lead, zinc, and 12 other critical minerals will further accelerate the growth of the e-mobility sector.
This forward-looking approach to clean technologies, particularly in EV batteries, will not only foster innovation but also attract investments. It lays a solid foundation for a greener, more resilient future by enhancing domestic EV production and strengthening critical elements of the value chain—especially in battery development and manufacturing. We believe these initiatives will have a long-term positive impact on the auto sector, enabling India to emerge as a global leader in electric mobility.
The Budget’s focus on nuclear energy as a clean energy source is another pivotal step in India’s transition to a sustainable future. This move will not only support the mobility sector but will also benefit the broader energy sector, providing long-term advantages in powering India’s growth with cleaner, more efficient energy solutions.
Moreover, the additional credit support extended to MSMEs, Start-ups, and the farming community will drive innovation, empower local businesses, and contribute to economic growth across sectors. By strengthening the foundation for entrepreneurship and economic resilience, the Budget paves the way for a self-reliant and technology-driven future for India.
In conclusion, this Union Budget sets a visionary framework for growth, innovation, and sustainability, positioning India to lead in both the global auto sector and clean energy transition. It is a defining moment that will shape the future of our economy and bharat 2.0.”
Strengthening India’s Global EV Position
Overall, the budget is positive for auto OEMs and EV component manufacturers.With export-driven incentives and manufacturing-friendly policies, India is poised to enhance its global competitiveness in EV and component production. These reforms align with the government’s vision to make India a global EV technology hub.
