From EV incentives to farm mechanisation, stakeholders across the automotive ecosystem outline their expectations for a growth-enabling Budget.
30 Jan 2026 | 468 Views | By Shruti Shiraguppi
As Finance Minister Nirmala Sitharaman prepares to present the Union Budget 2026-27, the automotive industry finds itself at a critical juncture. Following the successful implementation of GST 2.0 reforms and amid a rapidly evolving mobility landscape, industry stakeholders are seeking policy continuity, targeted incentives, and a clear roadmap for sustainable ...
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As Finance Minister Nirmala Sitharaman prepares to present the Union Budget 2026-27, the automotive industry finds itself at a critical juncture. Following the successful implementation of GST 2.0 reforms and amid a rapidly evolving mobility landscape, industry stakeholders are seeking policy continuity, targeted incentives, and a clear roadmap for sustainable growth.
Autocar Professional reached out to leaders across the automotive value chain—from OEMs and component manufacturers to charging infrastructure providers and agricultural equipment makers—to understand their expectations from the upcoming Budget. Their responses converge on several key themes: accelerating electric mobility, strengthening domestic manufacturing, rationalising taxation, and building robust infrastructure.
The electric vehicle segment dominates Budget expectations, with stakeholders unanimously calling for continued policy support and duty rationalisation to accelerate adoption.
Jyoti Malhotra, Managing Director, Volvo Car India, emphasises the need for predictability: "Following the implementation of GST reforms, the sector stands at a pivotal inflection point, where sustained and predictable policy support can help accelerate recovery and stimulate long-term demand. Rationalisation of the duty structure, particularly for the rapidly growing electric vehicle segment along with well-calibrated incentives for global automobile manufacturers investing in sustainable mobility, would serve as strong catalysts."
Ajinkya Firodia, Vice Chairman & Managing Director, Kinetic Watts & Volts Ltd, strikes an optimistic note: "The sun has truly risen over India's electric mobility industry. As we look ahead to the upcoming Union Budget, there is strong hope that the Government of India will continue to reward EV consumers by extending flagship initiatives such as the PM E-Drive policy, while further enhancing incentives for citizens who are embracing cleaner and future-ready technologies." He also proposes a novel approach to offset fiscal impact: "The government could consider a calibrated pollution-linked tax on high-emission vehicles, similar to the 'sin' tax on cigarettes."
Anurag Mehrotra, Managing Director, JSW MG Motor India, echoes these sentiments: "On the electric mobility front, we expect the government to further strengthen consumer-led incentives and schemes to accelerate EV adoption. Rationalization of duties on EV components would be a welcome move, along with greater support for localization of EV manufacturing."
Hemal Thakkar, Director, Crisil Intelligence, offers a specific recommendation: "Extending PM E-DRIVE subsidies to electric passenger vehicles in the fleet segment could help address emissions as a fleet car typically runs 4-5 times more than a personal vehicle. Further, higher incentives under vehicle scrapping policy would provide a sustained boost to the automotive industry."
A robust charging network remains critical to EV adoption, and industry players are calling for specific interventions to unlock investment in this space.
S Raghav Bharadwaj, CEO & Founder, Bolt.Earth, highlights a key anomaly: "Currently, EVs are taxed at 5% GST, while charging services attract 18%. Reducing the inverted duty structure on charging services to 5% would lower costs for the end consumer, spurring growth." He also advocates for financial sector support: "Inclusion of EV charging infrastructure under Priority Sector Lending would unlock affordable capital for CPOs, businesses and startups, allowing us to move from installing thousands of chargers to millions."
Malhotra of Volvo Car India adds: "The government's focus on expansion of charging infrastructure in the country will act as an impetus to green mobility. Such measures can not only strengthen India's position as a progressive automotive market but also reinforce the country's transition towards cleaner, safer and more sustainable transportation."
Mehrotra of JSW MG Motor concurs: "While the charging network has expanded, there is still considerable progress to be made, and we would greatly appreciate strong fiscal support for the expansion of charging infrastructure."
With batteries accounting for nearly half the cost of an EV, localising the battery value chain has emerged as a strategic imperative.
S Sunil Kumar, Country President, Henkel Adhesives Technologies, articulates the case comprehensively: "What the ecosystem needs is a coherent, end-to-end framework that supports materials, manufacturing, integration, and recycling as a single system. Localisation at this stage is not about import substitution; it is about building durable cost structures through scale, learning curves, and design optimisation."
He underscores the need for policy certainty: "Battery investments have long gestation cycles, and only long-term policy certainty can unlock the capital required to make EVs affordable at scale. Union Budget 2026 presents an opportunity to reinforce this long-term direction and create the conditions for sustained investment across the battery value chain."
Kumar also highlights the geopolitical dimension: "As global battery supply chains remain concentrated and exposed to disruption, Union Budget 2026 has an opportunity to position battery localization as a resilience and sustainability imperative. If executed well, localized battery ecosystems will shift batteries from being a cost constraint to a strategic advantage."
The auto component sector and tyre industry are seeking policy interventions to enhance India's position as a global manufacturing hub.
Viveka Bhandari, COO, PVNA Group, outlines clear expectations: "We expect the Budget to further strengthen India's manufacturing-led growth by deepening support for EV localisation through targeted PLI incentives, GST rationalisation, and enhanced R&D and skilling allocations, positioning India as a globally competitive hub for advanced automotive components and resilient clean-mobility supply chains."
Harinder Singh, Managing Director & CEO, Yokohama India, highlights specific challenges facing the tyre industry: "Input cost stability remains the sector's most pressing challenge. Natural rubber volatility continues to impact margins significantly. With India importing a substantial portion of its natural rubber requirements due to limited domestic availability, duty rationalization on critical raw materials would meaningfully improve cost efficiency and strengthen the global competitiveness of Indian tyre manufacturers."
Singh identifies three critical priorities: "For India to emerge as a global manufacturing hub for premium tyres, the Budget must deliver on three critical fronts: continued infrastructure capital expenditure to sustain automotive demand, enhanced export facilitation measures including duty drawbacks and logistics support, and stable trade policies on raw materials that provide cost predictability."
Firodia of Kinetic emphasises support for domestic entrepreneurs: "The EV ecosystem must recognise and support manufacturers who have the courage to invest early. A dedicated PLI framework for startups and mid-scale entrepreneurs is essential—one that empowers Indian companies to innovate and compete in an industry dominated by global giants."
Across the board, industry leaders stress the importance of policy stability and continuity for sustained investment and growth.
Piyush Arora, Managing Director & CEO, Škoda Auto Volkswagen India, sets the tone: "As the Union Budget approaches, after the successful and welcome implementation of GST 2.0, the industry will be looking for policy continuity and long-term clarity. Sustained support for domestic manufacturing and increased allocation for road and transport infrastructure will be key priorities."
He adds: "A renewed push on the next phase of customs reforms in the Union Budget—as anticipated in recent media reports—would be a timely and welcome step to further improve trade efficiency and unlock India's full economic potential. Rationalising the inverted duty structure for EVs will strengthen domestic manufacturing and competitiveness."
Thakkar of Crisil Intelligence raises an important concern regarding working capital: "The budget can also expand scope of Section 54(6) of the GST Act to allow for provisional refunds in inverted duty structure cases, which choke working capital."
Beyond physical infrastructure, the need for digital optimisation of energy systems is gaining attention.
Vaibhav Kaushik, Co-founder & CEO, Nawgati, offers a fresh perspective: "The conversation must move beyond how many chargers or stations we build, to how efficiently we run the infrastructure we already have. Whether it is EV charging networks or CNG stations, the real gap today is not capacity, but coordination."
He makes a compelling case for digital investment: "The opportunity lies in recognizing digital infrastructure as essential energy infrastructure. Incentives that encourage automation, interoperability, and data-driven operations will not only support India's climate goals but also ensure that every rupee invested in clean energy delivers maximum value on the ground. The next phase of India's energy transition will not be defined by how fast we add assets, but by how intelligently we operate them."
Bharadwaj of Bolt.Earth aligns with this view: "The industry expects targeted investment-led policies to accelerate AI and IoT integration across the EV ecosystem. Stronger R&D incentives will be critical to keeping Indian companies globally competitive in an increasingly digital-first mobility landscape."
The role of Global Capability Centres and skill development in driving automotive innovation finds prominent mention.
Prasanth Doreswamy, CEO, AUMOVIO India (formerly Continental), articulates the broader vision: "As India charts its path toward becoming a $5 trillion economy, continued investment in both physical and digital infrastructure will be paramount to sustaining economic momentum and attracting global investments."
On GCCs specifically, he states: "We anticipate measures that include incentives for talent development, reskilling programs in emerging technologies like AI and advanced analytics, simplified regulatory compliance, and targeted support for GCC expansion into tier-2 and tier-3 cities. Such initiatives will democratize growth and unlock the potential of India's deep talent pool across geographies."
Firodia emphasises the human capital dimension: "A strong push for education and skill development is essential to retain India's extraordinary talent within the country. The future of innovation, manufacturing, and leadership clearly belongs to India—and empowering our youth at home will be the cornerstone of that future."
The agricultural equipment sector sees the Budget as an opportunity to accelerate mechanisation and support rural growth.
Narinder Mittal, President and Managing Director, CNH India, makes the case: "As agriculture remains central to India's economy, Union Budget 2026 is a critical opportunity to accelerate rural growth through deeper farm mechanisation. With rising productivity demands and increasing technology adoption, focused policy interventions can significantly scale such impact."
He outlines specific asks: "We look forward to targeted subsidies for crop solution equipment and implements, along with affordable and simplified financing for farm machinery, especially for small and marginal farmers. A forward-looking Budget that connects mechanization with sustainability and rural development will not only strengthen farm incomes but also build a resilient agricultural ecosystem for the future."
The recently announced Rs 1 lakh crore RDI fund has generated significant enthusiasm within the industry.
Firodia lauds the initiative: "The recently announced ₹1 lakh crore RDI fund stands out as an exemplary step in encouraging deep-tech research and innovation. It deserves special appreciation as part of the Hon'ble Prime Minister's vision for building a truly Atmanirbhar Bharat. This initiative has the potential to catalyse breakthrough technologies—reducing dependence on rare earths and imported lithium cells, while fostering sustainable, next-generation solutions."
As the automotive industry navigates a period of unprecedented transformation, the Union Budget 2026-27 assumes heightened significance. The consensus among industry leaders is clear: policy continuity, targeted incentives for electric mobility, rationalised taxation, and robust infrastructure investment are essential to sustain India's automotive growth story.
The expectations articulated here reflect not just sectoral interests but a broader vision for India's mobility future—one that balances economic growth with environmental sustainability, global competitiveness with domestic capability building, and technological advancement with inclusive development. The Budget will be a crucial test of whether policy keeps pace with industry ambition.