India’s Union Budget 2026 may be earmarked with a paradigm shift in the EV industry. Increased demands for affordability. At the time when Finance Minister Nirmala Sitharaman is preparing for the presentation on February 1. EV manufacturers are hopeful for relief from the “inverted duty structures” that have increased prices. The hopes for changes that could reduce import hurdles and intensify domestic manufacturing are high.


Budget 2026: Upcoming Dates

The Union Budget comes on a Sunday, February 1 at 11 AM in Lok Sabha. This session begins on January 28 to April 2. This clearly reflects urgency related to changes in EV policies. Particularly following cuts in EV import duty to 15% on Higher Models under SPMEPCI. Expectations revolve around filling the pain points such as high GST rates on batteries (18%) compared to finished EVs (5%).


Challenges Presently Facing EV Duty Payments

At present, EVs are benefiting from a conducive 5% GST rate. While parts are causing troubles:

  1. Battery and Charging Misalignment: 18% GST raises the cost structure even while exemptions are provided on some unprocessed materials.
  2. Import duties: Cut from 110% to 15% in the post-2025 era. But foreign companies are cautious about entering the market unless investment promises are fulfilled.
  3. PLI scheme glitches: The Auto PLI sector requires multiple to fix glitches to attract companies like Tesla competition.
  4. Inverted systems: According to industry trends, are impeding the achievement of 30% EV penetration by 2030 for India.​


What the Industry Wants?

Auto leaders are not calling for across-the-board reductions. But specific solutions for standardizing GST across the supply chain of EVs at 5%.

  1. Refund duties on capital goods and battery components.
  2. SPMEPCI to be fine-tuned to ensure easy worldwide accessibility. Indian and European Union trade agreements
  3. Promote PM E-DRIVE with fleet-oriented incentives to support electric buses and public transportation.​
  4. Deloitte India proposes that ‘smarter’ import duties could drive economic growth without impacting revenues.


Potential Game-Changers

With these changes, priced reductions could lead to a fall of 10-15% in the cost of EVs. Further kick-starting two-wheeler and fleet sales—clearly India's sweet spot for EVs. Domestic manufacturing could see an increase, with more employment opportunities and less dependence on Chinese cells. However, danger lurks, and domestic players like Tata and Mahindra could be sidelined.


ELCTRIK Speaks

Though nothing major in EV taxation is proposed for Budget 2026 as of now. The need for the EV industry to have smarter solutions for GST harmonisation and removing inverted structures is right on point. It just may have the potential to turbocharge the affordability and production of EVs in the country to hit the 30% mark for EV adoption in 2030. NR Sitharaman’s February 1 announcement could very well give the EV industry the boost it so desperately needs.

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