Budget 2025-26: Industry Calls For EV Tax Cuts, Incentives & Infrastructure Boost

As India's transition to sustainable and electric mobility accelerates, its impact is evident in various ways. The Auto Expo serves as a key indicator, with 30 out of 90 car launches being EVs. The visible changes anticipated in the Union Budget for 2025-26 is a momentous occasion to fix the problems and unlock the dormant potential of the EV sector.

Industry experts have cited their expectations and recommendations from the budget, arguing in favor of policy reforms, fiscal incentives, and infrastructure development to facilitate EV adoption. Their opinion points to the government's responsibility of encouraging innovation, driving down costs, and enhancing access for both manufacturers and consumers.

Here is what the industry expects from this budget:

Dinkar Agrawal, Founder, CTO & COO, Oben Electric
Simplifying the GST structure with a uniform 5% tax across EVs, components, and charging infrastructure is essential to reducing costs and fostering growth. Additionally, resolving the inverted GST structure on raw materials will ease working capital pressures and encourage sustainable manufacturing. Performance-linked incentives for battery innovation and indigenous component manufacturing can further strengthen India’s Make-in-India push, positioning the country as a global leader in EV technology. On the consumer front, initiatives like reduced interest rates on EV loans and targeted subsidies can make electric vehicles more accessible, bridging the affordability gap.

Sandiip Bhammer, Managing Partner, Green Frontier Capital
As the globe looks to India for leadership in the fight against climate change, the upcoming budget offers a pivotal opportunity for us to take pole position by accelerating growth in the greentech, energy and electric mobility sectors. Priorities should include scaling production-linked incentives (PLIs) for EV manufacturing, introducing tax benefits for R&D in breakthrough climate-tech solutions and strengthening adoption of renewable energy with clear implementation roadmaps. By creating an enabling ecosystem for private capital and innovation, India can not only meet its climate goals but also emerge as the global hub for green solutions that drive sustainable growth.

Chakravarthi C. Managing Director, Quantum Energy
We are optimistic about the upcoming budget 2024-25 and anticipate favorable announcements and clear policy implementation. We look forward to targeted incentives, like FAME 3.0 (Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicle), which could make electric two-wheelers more affordable for everyday commuters, thereby expanding our market presence. Additionally, reducing GST on EVs and offering higher purchase subsidies could remarkably boost consumer adoption. We are looking forward to increased support in local battery production and innovation, which is critical for sustainable and cost-effective EVs. An increase in the 'Make in India' initiative and localized manufacturing of our electric two-wheelers would enable manufacturers in India, like us, to create more efficient and sustainable mobility solutions that could compete with international brands and be within reach of a wider consumer segment. Others are simplifying and enhancing financing options to boost the adoption rates of EVs. Furthermore, we look forward to the direction of policies that expedite the development of a robust charging infrastructure, such as incentives for renewable energy-powered charging stations, for seamless and eco-friendly commutes. Research and development support and export incentives will arm us with an innovative edge and allow us to stretch out our global footprint. Such an integrated initiative would benefit the overall EV ecosystem and help shift to electrical transportation, bringing a greener commute for millions.

Mukesh Taneja, CEO And Co-founder, GT Force
With the short-term EMPS 2024 (Electric Mobility Promotion Scheme) set to end on July 31, 2024, we urge the government to introduce a robust, long-term successor to this scheme that addresses the evolving needs of the EV ecosystem. This new framework should not only continue demand incentives for consumers but also focus on supply-side interventions to boost domestic manufacturing and innovation. In particular, as EV charging infrastructure expansion is still a major contributor to consumer trust in electric mobility, we expect more funding to be allocated for this project nationally. Incentives for the development of battery technology and the localization of EV components are also something we wish to see, as these are essential for cutting costs and raising the competitiveness of EVs produced in India. Additionally, we anticipate that the government will think about lowering the existing 18% GST rate on EV batteries and components to 5%. This tax rationalization would help offset the potential price increase resulting from the conclusion of subsidy programs and keep EVs affordable for the masses. For startups like GT Force, we hope to see targeted initiatives that support R&D, provide easier access to capital, and offer production-linked incentives. These measures would enable us to scale operations, innovate rapidly, and contribute more significantly to India's EV manufacturing capabilities. Moreover, we anticipate policies that promote the integration of EVs with renewable energy sources and support the development of a circular economy for EV batteries. This holistic approach would not only boost the EV industry but also align with India's broader climate goals and commitment to sustainable development.

Tushar Choudhary, Founder & CEO, Motovolt Mobility
We anticipate an expansion of the FAME II scheme with increased subsidies, especially for commercial EV fleets including two wheelers. It is crucial to incentivize domestic manufacturing of EV components like batteries and electronics to reduce import dependency and bolster supply chains. Lowering GST on EVs and components would boost affordability, while enhanced tax benefits for EV buyers and infrastructure investors will spur adaptation to the sector. Allocating funds for charging stations in urban, Highways, and rural areas is essential for infrastructure development alongside incentives for battery swapping stations. Investments in R&D for updating battery technology, EV powertrains, and charging infrastructure are critical, as is enabling industry-academia collaboration for innovation. Strengthening state and central EV policies, coupled with robust vehicle scrappage policies, will help facilitate the adoption of EV vehicles and form the shift from ICE vehicles. Green financing, low-interest loans, and public awareness campaigns about the EV benefits will provide the boost needed by the industry. Clean energy use will be advanced and in line with sustainability goals by integrating EV charging with renewable energy sources and promoting energy storage technologies. We anticipate a budget that tackles these issues, establishing the framework for an EV ecosystem in India that is robust and sustainable, lowering carbon emissions, and encouraging environmentally friendly transportation.

Maxson Lewis, Founder & CEO
As we await the forthcoming July Budget, the logistics sector braces for a transformative leap. During the interim budget, we saw the government’s commitment towards expanding the EV ecosystem in India and underscored the need to develop more charging stations.

While lauding previous initiatives like FAME II and EMPS, expectations are high for a new subsidy scheme akin to FAME II, with equivalent value but more stringent eligibility criteria for vehicle types and localization requirements. The subsidy scope is anticipated to expand, covering larger vehicle segments like trucks in addition to passenger vehicles, two-wheelers, and three-wheelers.

A significant emphasis on Research & Development (R&D) and domestic manufacturing capabilities for EVs and batteries is expected, with the Production-Linked Incentive (PLI) scheme receiving further support. Revisiting EV's priority lending sector status and reinforcing efforts are also on the cards.

Crucially, affordability for commercial EV fleets and planned innovation must take center stage through incentives, making EVs cost-effective for fleet operators, driving efficient logistics solutions, and fostering a sustainable transportation ecosystem. Amped-up R&D funding could unlock lighter, safer, domestically made batteries, thus lowering costs and boosting performance as well as rendering sustainable transportation practical and profitable.