Budget 2025 Pushes For Greater Electric Vehicle Adoption For Indian Auto Industry

Customs duty exemption on 35 capital goods for ev battery manufacturing is a crucial boost for the Indian ev segment. This creates an ecosystem for ev batteries, motors, solar PV sales and more.

In EVs, the battery is the most expensive part and lowering of manufacturing costs will boost ev adoption with lowering prices.

Source : Somnath Chatterjee

Union Budget 2025-26 has brought some cheer for the Indian auto industry with several key changes. The bigger emphasis is on greater electric vehicle adoption and making India a hub for ev manufacturing as well as battery manufacturing. In EVs, the battery is the most expensive part and lowering of manufacturing costs will boost ev adoption with lowering prices.

Customs duty exemption on 35 capital goods for ev battery manufacturing is a crucial boost for the Indian ev segment. This creates an ecosystem for ev batteries, motors, solar PV sales and more.

The initiative for making India an address for battery manufacturing also includes battery recycling. The other big change is to boost consumer demand with no income tax up to 12 lakh which will mean the middle class will have more buying power in terms of new cars. Expect greater sales in entry level cars too.

What this means is that in the future EVs would be cheaper and there would be less dependence on imports. In 2024 EV car sales increased owing to new product launches and more aggressive pricing for new products in this segment. Electric cars still have a small part of the total market and there is clearly scope for growth. More EV battery manufacturing in India will mean more EVs with lower prices and matching petrol cars in the future will boost demand.