Union Budget 2025-26: A Game-Changer for India’s Electric Vehicle Landscape

Key Takeaways

Electric vehicle (EV) industry leaders urge the Indian government to implement reforms to improve affordability, infrastructure, and innovation.
Stakeholders emphasize simplifying the GST structure and providing financial support to boost manufacturing and adoption of EVs.
The upcoming Union Budget 2025-26 is viewed as a critical opportunity for the government to enhance the EV ecosystem in India.

Call for Transformative Reforms in the EV Sector

As India prepares for the Union Budget 2025-26, players in the electric vehicle (EV) sector are advocating for significant reforms from Finance Minister Nirmala Sitharaman. Industry stakeholders emphasize the need for measures that enhance affordability, bolster infrastructure, and spur innovation in order to address challenges related to manufacturing and consumer adoption.

The Indian government has already taken proactive steps to promote the EV sector through various initiatives, including the Faster Adoption and Manufacturing of Electric Vehicles in India (FAME India) Scheme, the Production Linked Incentive (PLI) Scheme, and the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) Scheme, among others. These programs aim to support the industry’s growth in response to urgent issues such as environmental pollution, energy security, and economic sustainability.

Anshul Gupta, Managing Director of OPG Mobility, points out that the industry is experiencing rapid growth due to the drive for sustainability. He highlights critical areas that need attention, including infrastructure challenges and high manufacturing costs. Gupta urges the government to provide substantial financial support through subsidies and tax rebates, and to invest in public charging infrastructure. He believes enhancing mobility solutions in tier 2 and tier 3 cities, particularly through affordable electric two-wheelers and three-wheelers, can accelerate overall EV adoption.

Dinkar Agrawal, Founder and CTO of Oben Electric, calls for structural reforms to reduce costs in the EV sector. He proposes simplifying the Goods and Services Tax (GST) framework to a uniform 5 percent for all EV-related products and services. Agrawal argues that addressing the inverted GST structure on raw materials could alleviate working capital pressures and promote sustainable manufacturing. Additionally, he highlights the necessity of consumer-focused measures such as reduced interest rates on EV loans and targeted subsidies.

Kunal Arya, Co-Founder and Managing Director at ZELIO E Mobility Ltd, stresses the need for consistent policy support. He advocates for long-term subsidies similar to those provided under the FAME scheme, which would not only support industry expansion but also encourage consumer adoption. Arya suggests lowering the GST on spare parts from 28 percent to a range of 5-12 percent to significantly cut production costs and make EVs more affordable.

Ishaan Parwanda, Director of Trinity Touch, points to discrepancies in the current tax structure, where EVs benefit from a 5 percent GST while lithium-ion batteries and charging services face an 18 percent tax. He urges the government to reduce this rate to create a more equitable tax environment. Parwanda highlights the importance of promoting local manufacturing through special Production Linked Incentives (PLI) for EV components to reduce dependence on imports and support the Atmanirbhar Bharat initiative.

Raghav Arora, Co-Founder and CTO of Statiq, underscores the significance of technology in advancing the EV ecosystem. He believes that innovation in battery technology, charging infrastructure, and smart mobility solutions is crucial for overcoming existing obstacles. Arora reiterates the call to lower GST rates on charging and battery services to make EV adoption more accessible and stimulate demand.

As the Union Budget 2025 approaches, the EV industry remains optimistic about the possibility of decisive government action. Industry players collectively believe that addressing infrastructure challenges, streamlining taxes, and fostering innovation will propel India closer to its goals of sustainable mobility.

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