As India approaches the Union Budget 2025, the Indian automotive sector is eagerly anticipating policy reforms and incentives to fuel growth, sustainability, and innovation. Industry leaders are urging the government to prioritize electric mobility, local manufacturing, and infrastructure development, recognizing the sector’s vital role in the country’s economy.
P.B. Balaji, CFO of Tata Motors, emphasized the need for measures to boost consumption, which he believes would help the automotive sector navigate current external challenges. “If there are consumption-boosting measures in the Budget, it will help address some of the external pressures we face,” Balaji stated. “Any efforts to turbocharge growth will significantly benefit the sector.”
A major expectation from the industry is a reduction in Goods and Services Tax (GST) rates for electric vehicle (EV) components such as batteries and chargers, as well as increased incentives for EV buyers. Santosh Iyer, Managing Director & CEO of Mercedes-Benz India, highlighted the importance of continued support for Battery Electric Vehicles (BEVs), saying, “A continued push for BEV adoption, coupled with incentives for infrastructure development and R&D, will be crucial in accelerating India’s green mobility transition.”
The industry is calling for a uniform 18% GST across all vehicle categories, down from the current 28% GST on petrol and diesel vehicles. Piyush Arora, MD & CEO of Skoda Auto Volkswagen India, expressed the hope that the upcoming budget would address the need for a more favorable tax structure for various automotive technologies. “A long-term vision for a favorable tax structure, catering to different automotive technologies, will benefit the industry. Simplifying the GST structure for vehicles and components should be a priority,” Arora said.
Nagesh Basavanhalli, Vice Chairman of Greaves Cotton Limited, stressed the importance of investing in research and development, adding, “Encouraging investments in R&D and strengthening the domestic supply chain for EV components will not only reduce reliance on imports but also foster innovation, advancing both economic growth and sustainability goals.”
The automotive industry is calling for higher budget allocations to build EV charging infrastructure, particularly along highways and in urban centers. Stakeholders are also urging the government to incentivize the establishment of private and commercial charging stations. In addition, there is a push for more investment in road infrastructure to improve supply chain efficiency and enhance vehicle safety, which would contribute to the sector’s long-term growth.
The Commercial Vehicle (CV) sector is seeking higher incentives for fleet modernization, which would facilitate the replacement of older, polluting vehicles with cleaner, more efficient alternatives. Uday Narang, Founder and Chairman of Omega Seiki Private Limited, called for increased incentives for the electric truck and three-wheeler segments, which he believes are poised to revolutionize the logistics and transportation sectors. “The growing demand for electric three-wheelers and E-trucks is an opportunity for the government to expand incentives for both manufacturers and consumers,” Narang said.
As the Union Budget 2025 approaches, the Indian auto industry remains hopeful for reforms and incentives that will foster sustainable growth, boost local manufacturing, and accelerate the shift toward green mobility. Experts agree that with the right policy mix, the sector can continue to be a key driver of India’s economic progress, while contributing to the country’s ambitious green mobility goals.
