The Indian Budget 2025 has brought notable policy measures that will shape the future of the automobile industry. With a strong emphasis on domestic manufacturing and electric vehicle (EV) adoption. Here are the key takeaways from this year’s budget for the automobile sector.
Boost for Electric Vehicles & Clean Mobility
Incentives for EV Battery Manufacturing
The government has exempted duties on 35 additional capital goods, including advanced machinery for battery cell production, electrode manufacturing equipment, and high-precision coating systems used for manufacturing lithium-ion batteries, reducing costs for local EV production. This is expected to accelerate the adoption of EVs by making them more affordable.
Reduction in Waste Battery Duty
To promote battery recycling, the import duties on waste and scrap of lithium-ion batteries have been removed. This move aligns with the government’s push for sustainability and circular economy practices in the EV sector.
Infrastructure & Auto Components
Lower Tariffs for Auto Components
The government has reduced tariffs on flat-rolled steel products, stainless steel pipes, bolts, nuts, and cast-iron components. This will lower raw material costs for domestic automobile manufacturers and auto component suppliers, boosting competitiveness.
Industry & Digital Transformation Initiatives
Manufacturing Incentives Under ‘Make in India’
A National Manufacturing Mission has been announced to drive growth in auto components, EV supply chains, and clean tech industries. The mission includes a budget allocation of INR 10,000 crore for research and development, infrastructure support, and incentives for new manufacturing units, ensuring sustainable growth and technological advancement in the sector. This will provide policy support and incentives for setting up new manufacturing units.
Deep Tech Fund for Automobile R&D
A new Deep Tech Fund has been introduced to support AI-driven manufacturing, smart mobility solutions, and autonomous vehicle technology. This will push Indian automakers towards adopting cutting-edge innovations in the sector.
Impact on Consumers
Boost in Demand Due to Income Tax Cuts
The reduction in income tax rates means more disposable income in the hands of consumers. This increase in spending power is expected to boost demand for both traditional and electric vehicles, as more people consider upgrading or purchasing new cars.
EV Prices May Drop
With incentives for local battery production and tariff exemptions, EVs and electric two-wheelers may become more affordable in the coming years, encouraging more consumers to make the switch to green mobility.
Final Thoughts
The Budget 2025 clearly signals a pro-EV and pro-domestic manufacturing stance, making it cheaper to produce vehicles locally. This move will boost India’s self-reliance in the automobile sector through increased local investment, technology transfer agreements, and incentives for domestic production of key components, create jobs and support sustainable mobility solutions. If these policies are executed effectively, India’s position as a global auto manufacturing hub will strengthen in the years to come.
2 Responses
Nice overview on Budget impact on EV.
This was a great read!