The Union Budget for fiscal year 2025-26, which will be announced by Finance Minister Nirmala Sitharaman in February, has aroused enormous expectations in a variety of sectors, including the electric vehicle (EV) industry. Industry stakeholders anticipate policies that will accelerate India's shift from fossil fuel-powered automobiles to electric alternatives.
According to Union Minister Nitin Gadkari, the Indian EV sector is expected to generate five crore employment and be valued at ₹20 lakh crore by 2030. As the business expands rapidly, fiscal policies and incentives in the 2018 budget are projected to provide a further boost.
Key initiatives could solve persistent issues, like high pricing and insufficient infrastructure, which have hampered widespread EV adoption. Experts also highlight the importance of policies that promote production and lessen dependency on subsidies as the industry grows.
Since it began in 2015, India's EV policy has relied heavily on the Faster Adoption and Manufacturing of Electric Vehicles (FAME) plan. FAME-II allocated ₹10,000 crore to incentivise EV adoption, leading to tremendous growth in the sector. However, the initiative ended in May 2024, giving place to the PM-E Drive scheme, which was established during Budget 2024. PM-E Drive, which will be implemented in October 2024, intends to reduce subsidy dependency while enhancing the EV ecosystem.
Experts believe that the 2025 Budget would prioritise performance-based incentives, particularly for battery and auto-component manufacture. Such regulations could boost domestic output and are consistent with the government's objective of self-reliance.
GST parity for EV batteries has long been a popular demand in the EV market, as it might lower production costs and make electric vehicles more accessible. While the GST Council has yet to address this issue, industry sources expect that the Budget will include steps to close the gap.
Another objective is to provide affordable financing for EV purchases, as well as to improve charging infrastructure. Proposals to categorise EV charging infrastructure as "infrastructure industry" could increase access to lower-cost finance and lower setup expenses. Furthermore, stakeholders argue for tax breaks and lower loan interest rates to motivate consumers.
The lack of broad and reliable charging infrastructure continues to discourage EV adoption. Charging infrastructure might be classified as vital infrastructure in the budget, encouraging investment and expanding access to EV charging networks. Furthermore, engaging charge point operators in priority sector lending could help to lower financing costs.
India's EV industry likewise lags behind its global counterparts, particularly in battery manufacturing. Unlike China, which dominates the global EV battery business, India has yet to emerge as a major participant. The 2025 Budget may promote local battery production through incentives and collaborations with multinational corporations.
To enhance competitiveness, India must align its EV policies with global standards. Experts suggest that the Budget could include measures to attract foreign investment and facilitate technology transfers, positioning India as a significant player in the global EV market.
As India gears up for the Union Budget 2025–26, the EV industry remains hopeful for transformative measures that could address existing challenges and propel the sector forward. With the right policies, the Budget has the potential to accelerate India’s journey toward a sustainable and electrified future.
