Anushruti Singh
The electric vehicle (EV) industry is at a pivotal juncture as it accelerates toward achieving 30 per cent penetration by 2030. According to the Tata Consultancy Services (TCS) Future-Ready eMobility Study 2025, 64 per cent of consumers globally are likely to choose an EV for their next purchase, signaling a paradigm shift toward sustainable transportation. However, affordability, charging infrastructure, and battery technology remain significant hurdles.
The upcoming Union Budget 2025 is seen as a golden opportunity to address these challenges and further boost India’s transition to electric mobility. But first, let us look at what measures were proposed for the EV industry in the previous Union Budget 2024-25, which was presented in July 2024.
Major announcements from budget 2024
- Customs duty exemptions: The budget provided a complete customs duty exemption on 25 critical minerals, including lithium and cobalt, essential for EV battery manufacturing.
- Extension of concessional duty on Lithium-Ion cells: The concessional customs duty on lithium-ion cells was extended until March 2026, aiming to reduce the cost of EV batteries and promote domestic manufacturing.
- Support for MSMEs: The budget included measures to support Micro, Small, and Medium Enterprises (MSMEs), many of which are integral to the EV supply chain.
However, the budget did not address certain industry expectations, such as:
GST Simplification: The industry had hoped for a uniform 5 per cent GST across all EV components and charging infrastructure to reduce costs and foster growth.
Inverted duty structure: There was an expectation to resolve the inverted GST structure on raw materials, which affects working capital requirements for manufacturers.
Increased allocation for charging infrastructure: The budget fell short in increasing allocations for expanding EV charging infrastructure, a crucial element in fostering consumer confidence in electric mobility.
Overall, while the Union Budget 2024-25 introduced certain measures beneficial to the EV sector, it did not fully meet the industry’s expectations regarding tax rationalisation and infrastructure development.
Here’s what industry leaders expect from Finance Minister Nirmala Sitharaman’s budget this year.
Simplifying taxes and driving affordability
The EV sector has long advocated for tax reforms to reduce costs and boost adoption. Dinkar Agrawal, Founder, CTO, and COO of Oben Electric, emphasises the need for a uniform 5 per cent GST across EVs, components, and charging infrastructure.
“Simplifying the GST structure and addressing the inverted tax on raw materials will ease working capital pressures and encourage sustainable manufacturing. Performance-linked incentives for battery innovation and indigenous component manufacturing can position India as a global leader in EV technology,” he says.
On the consumer side, targeted subsidies and reduced interest rates on EV loans are expected to bridge the affordability gap, making EVs a viable option for a broader audience.
Boosting battery manufacturing and technology
Battery technology remains the backbone of EV development. Samrath Singh Kochar, Founder and CEO of Trontek, highlights the importance of advanced battery solutions in driving the sector forward.
“The budget must incentivise the development and adoption of high-quality, long-lasting battery technologies, to ensure self-reliance and less dependency on imports. Support for sustainable energy storage solutions will not only benefit EVs but also renewable energy and backup power systems,” says Kochar.
Pratik Kamdar, CEO and Co-founder of Neuron Energy, echoed this sentiment, urging the government to achieve GST parity for EV batteries and foster international collaborations.
“Enhanced FAME II schemes with extended timelines and increased incentives can catalyse widespread adoption across vehicle categories. Prioritising charge point operators under priority sector lending will also accelerate the deployment of charging networks,” he adds.
Also Read: What Indian MSMEs want from union budget
Make it easier for consumers
Besides talking about the tax incentives, EV infrastructure, and domestic battery manufacturing, EV Industry is also expecting initiatives on ease of buying for consumers. Gunjan Malhotra, Co-founder, of Komaki Electric says, “EV automobile industry is expecting development in terms of expanding green financing options and lowering interest rates on EV loans to boost adoption and make it more accessible for both urban and rural consumers,”
“Additionally, investing in research and development for advanced battery technologies will also be crucial for adding to the performance and credibility of electric vehicles,” she adds.
Encouraging retrofitting and hybrid solutions
The EV transition isn’t just about new vehicles. Nikhil Khurana, Founder & CEO of Folks Motor, underscores the role of retrofitting and hybrid-electric models in making clean mobility more accessible.
“We hope the government will provide tax benefits for hybrid-electric vehicles, promote retrofitting adoption, and expand charging infrastructure. These initiatives can accelerate the adoption of xEVs and Evs, while significantly reduce fuel consumption and emissions while making green mobility solutions more affordable,” says Khurana.
Charging Infrastructure: The Cornerstone of EV Growth
Charging infrastructure remains a key concern for manufacturers and consumers alike. The TCS study revealed that 60 per cent of consumers and 74 per cent of manufacturers identify inadequate charging networks as a barrier to EV adoption.
To tackle this, industry leaders are urging the government to prioritise infrastructure investments and enable easier financing for charge point operators. This step will ensure a robust and widespread network capable of supporting the growing EV fleet.
Munira Loliwala, VP- Strategy and Growth at TeamLease Digital, sums it up succinctly, “The auto industry is looking for a budget that simplifies GST structures across vehicles and components, reduces GST on hybrid vehicles and EV batteries, and streamlines refund processes for EV manufacturers. Addressing delays in PLI disbursements and easing value addition norms can significantly boost domestic participation,”
He recommends, expanding incentives to cover electric passenger car manufacturing and introducing performance-linked incentives for batteries and components is essential. “Classifying charging infrastructure as part of the ‘infrastructure industry’ can unlock affordable financing, while GST cuts on charging services are critical to accelerating India’s transition to sustainable mobility and fostering job creation,” he says.
What sector foresee
With a valuation of ₹20 lakh crore and the potential to create 5 crore jobs by 2030, the EV industry represents a cornerstone of India’s vision for a sustainable future. As Earl Newsome, Global CIO at Cummins, aptly put it, “The future of mobility is electric, connected, and sustainable.”
The Union Budget 2025 holds the promise of addressing key challenges and unlocking the full potential of India’s EV ecosystem. By simplifying taxes, boosting battery innovation, expanding charging infrastructure, and fostering hybrid solutions, the government can empower the EV industry to lead the charge toward a cleaner, greener tomorrow.
The question remains—will this budget deliver the much-needed push?
