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India’s 2025 Budget Boosts EVs, Clean Tech Growth

Automotive

Business Honor
02 Febuary, 2025

India's Union Budget 2025-26 boosts the automotive sector with incentives for EV adoption, clean tech, and manufacturing localisation.

To strengthen the automotive sector of India, the Union Budget 2025-26 presented by Finance Minister Nirmala Sitharaman has proposed a comprehensive focus on electric vehicles, clean energy, and manufacturing localisation. The policy measures and incentives announced are expected to strengthen India's position in the global market as a leader in sustainable mobility and advanced automotive technologies.

It has also extended the exemptions on critical minerals such as cobalt, lithium-ion battery waste, and zinc, which are used in battery production for EVs. This reduces the input costs for the manufacturers and reiterates India's place as the center for battery manufacturing. Exemptions have been proposed for capital goods, which is used in the production of EV as well as mobile batteries with a view to increasing de-linking dependence on imported components.

The government will focus on the National Manufacturing Mission for Clean Tech to create domestic value addition in components like EV batteries, motors, controllers, and green hydrogen electrolyzers. This is to make India competitive in the global clean energy market. The Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme has also been extended, providing continued incentives for the adoption of EVs in two-wheelers and commercial vehicles.

To spur growth in the market, the budget cuts import duties on premium motorcycles and CBU cars, which will make high-end vehicles more affordable in India. In addition, the push for electronics and semiconductor manufacturing is in line with the larger objective of "Make in India" and promotes local production of automotive electronics.

Initiatives towards boosting exports and global trade integration will make the budget strengthen India's global automotive supply chain for long-term growth and competitiveness. This is a transformative budget that will fire up India's transition to cleaner mobility and enhance India's automotive sector's global stature.