The Union Budget, presented by the Finance Minister on February 1, 2025, has created a buzz in the electric vehicle sector. The budget is reflective of strategic intent in enhancing the domestic EV ecosystem on the pillars of affordability, manufacturing, and sustainability.
The response from the industry leaders is very positive. Girish Wagh, the Executive Director at Tata Motors, said, “This budget gives a strategic blow to increase indigenous EV production in the country to create a sustainable ecosystem.”
Key Announcements in Union Budget Influencing the EV Ecosystem
More Funds for EV Programs
- The budget earmarks ₹5,322 crore for schemes in support of electric mobility. 20% up from the last year. PM E-DRIVE Scheme supports a range of electric vehicles as well as public charging infrastructure. Funding has surged by over 114% to ₹4,000 crore for FY26.
Duty Exemption on Customs
- A significant modification is the 0% of Basic Customs Duty on vital inputs into the battery. Namely, cobalt and lithium-ion scrap for recycling were imposed on capital goods. Reducing the costs of production manifold and furthering the agenda for electric vehicle consumer affordability. It would also accelerate domestic manufacturing with fewer imports and reverse the vicious circle of foreign investment.
Consumer Tax Concession
- It further raises the exemption limit on income tax up to ₹12 lakh and improves the disposable incomes of middle-class consumers. This raises spending on autos and thus increases the demand for new, emerging electrical vehicles. Hence, an uptrend will continue for such electrical autos.
Jyoti Malhotra, Managing Director, Volvo Car India, welcomed this step of holistic development of electric vehicle infrastructure. “She said these steps would drastically increase the usage of electric vehicles in all the segments.”
Future Outlook from Budget
With these stringent measures in place, India’s EV sector will grow by leaps and bounds. Local manufacturing and government infrastructure development are key to sustained growth. However, long-term clarity on subsidies and accelerated development of charging infrastructure would be the real drivers for sustaining the growth momentum in the adoption of EVs.
ELCTRIK Speaks
With respect to the electric vehicle industry in India, the Union Budget marks an important step. Its focus on significant areas of reduction in manufacturing cost and increasing the affordability of these vehicles at consumer levels promises to users in a much greener transport future that meets the international standard of sustainability goals.