As the Union Budget 2025 approaches, anticipation is building across industries, with the automotive and electric vehicle (EV) sectors hoping for pivotal reforms to accelerate green mobility in India. The EV industry, which has witnessed rapid growth in recent years, now finds itself at a crucial juncture where policy interventions could significantly shape its trajectory.
Stakeholders from various segments of the sector have expressed their expectations, highlighting the pressing need for infrastructure development, affordability, and self-reliance in manufacturing. These reforms, they believe, could not only enhance adoption rates but also position India as a leader in sustainable transportation on the global stage.
With ambitious goals like achieving 30% EV penetration by 2030, the challenges of affordability, infrastructure gaps, and dependency on imports remain significant. Industry leaders are urging the government to address these issues through strategic measures in the upcoming budget. From GST reductions to technological advancements and incentives for domestic production, their suggestions aim to create a comprehensive roadmap for a greener future. Below, we delve into the key areas of focus as highlighted by prominent voices from the automotive and EV sectors.
Reduction in GST on critical components
A recurring demand across the EV sector is the reduction of the Goods and Services Tax (GST) on critical components like EV batteries and charging services. Currently, EVs attract a GST of 5%, but associated components such as batteries and charging infrastructure are taxed at a higher rate of 18%. Industry leaders argue that this disparity inflates costs, discouraging wider adoption.
Akshit Bansal, Founder and CEO of Statiq, a major EV charging network provider stressed the importance of revising these rates, stating, “We urge the government to reconsider the current GST rate of 18% on EV charging services and reduce it to 5%. Lowering this tax would not only make EV charging more affordable but also stimulate demand for electric vehicles, aligning with our goals for a cleaner and more sustainable future.”
Dinkar Agrawal, Founder, CTO, and COO of Oben Electric, an Indian electric motorcycle manufacturer echoed this sentiment, adding, “Simplifying the GST structure with a uniform 5% tax across EVs, components, and charging infrastructure is essential to reducing costs and fostering growth.”
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Reducing GST on Auto LPG has also been highlighted by Suyash Gupta, Director General of the Indian Auto LPG Coalition, who noted, “Reducing the GST on Auto LPG from the current 18% to 5% will level the playing field and make it more competitively priced, fostering greater adoption.” Such reforms, industry leaders believe, would make green mobility more accessible and affordable for consumers while aligning with the broader vision of sustainability.
Infrastructure development
One of the most pressing issues for the EV sector remains the lack of robust infrastructure, particularly charging networks. Without reliable and widespread charging stations, consumer confidence in adopting EVs remains low. Industry leaders have called for significant investments in this area.
Akshit Bansal pointed out, “The growth trajectory of the electric vehicle (EV) industry in India presents a tremendous opportunity to push for deeper Tier II city penetration. This is essential for advancing green and sustainable mobility across the nation. Robust infrastructure, particularly in the form of widespread EV charging stations, is paramount.”
Dr Yogesh Bhatia, CEO and MD of scooter and motorcycle manufacturer LML, emphasised the need to grant infrastructure status to charging stations, stating, “Granting infrastructure status to charging stations will facilitate easier financing and help address affordability and accessibility challenges.” These measures are seen as critical for building consumer trust and accelerating the transition to sustainable transportation.
Support for domestic manufacturing
India’s heavy reliance on imports for EV components has long been a point of concern. The industry is now urging the government to prioritise domestic production through targeted policies and incentives. Strengthening local manufacturing capabilities would not only reduce dependency on imports but also enhance India’s competitiveness in the global market.
Ankit Sharma of Vidyuta, a manufacturer of cathode active materials (CAM) for lithium-ion cells, highlighted the urgency of this issue, stating, “Prioritising domestic production in the EV sector—particularly in the manufacturing of Cathode Active Materials (CAM) for lithium-ion cells—is crucial. With geopolitical tensions and potential restrictions on critical components from China, strengthening domestic manufacturing capabilities is no longer optional but a necessity.”
Similarly, Ishaan Parwanda, Director of Trinity Touch, a major solutions provider for industrial electrical applications, advocated for incentives under the Atmanirbhar Bharat initiative, saying, “Promoting Atmanirbhar Bharat by introducing special Production Linked Incentives (PLI) and incentives for manufacturing EV components will boost production, reduce the cost of EV vehicles, and make them more affordable for Indian consumers.”
Incentives and subsidies
To further drive EV adoption, industry leaders have called for enhanced incentives and subsidies under existing schemes like the Production Linked Incentive (PLI) and Faster Adoption and Manufacturing of Electric Vehicles (FAME) schemes. These measures would provide much-needed support for startups and smaller enterprises in the sector.
Ankit Sharma of Vidyuta recommended adjusting eligibility criteria within the PLI scheme to accommodate smaller players, while extending the duration and funding of the FAME scheme. He stated, “Enhancing existing initiatives can create a more supportive ecosystem for startups, reduce supply chain risks, generate employment opportunities, and ensure national energy security.”
For the consumer side, Dinkar Agrawal suggested targeted subsidies and reduced interest rates on EV loans to make electric vehicles more accessible, bridging the affordability gap. Such initiatives would not only encourage consumer adoption but also stimulate long-term growth in the sector.
Technological advancements
Technological innovation is seen as a cornerstone for the growth of the EV sector in India. Leaders have emphasised the need to invest in cutting-edge technologies to overcome existing challenges and enhance the overall EV experience.
Raghav Arora, Co-Founder and CTO of Statiq, stressed the importance of leveraging advanced technologies, stating, “Innovations in battery technology, charging infrastructure, and smart mobility solutions are essential to overcoming existing challenges and enhancing the overall EV experience. By leveraging cutting-edge technologies such as AI and IoT, we can optimise charging networks and improve battery efficiency.”
Nagesh Basavanhalli, Vice Chairman of Greaves Cotton Limited, also highlighted the need for R&D investments, noting, “Encouraging investments in R&D and strengthening the domestic supply chain for EV components will play a pivotal role in reducing reliance on imports and fostering innovation.”
Environmental focus
The overarching theme across all expectations is the commitment to sustainability and environmental health. Industry leaders have underscored the need for cleaner alternatives to conventional fuels and the adoption of eco-friendly technologies.
Suyash Gupta pointed out the benefits of Auto LPG as a sustainable alternative, stating, “Auto LPG significantly reduces emissions of particulates (PM), carbon monoxide (CO), nitrogen oxides (NOx), and hydrocarbons (HC), while also aligning with global efforts to combat climate change.”
Meanwhile, Akshit Bansal called for the conversion of heavy commercial vehicles to eco-friendly alternatives to reduce pollution in major cities. Dr. Yogesh Bhatia reiterated the importance of policy advancements to foster innovative, eco-friendly mobility solutions, aligning with India’s vision for a greener future.
As the Union Budget 2025 nears, the automotive and EV sectors are united in their call for transformative reforms to accelerate the shift towards sustainable mobility. From GST reductions and infrastructure development to support for domestic manufacturing and technological innovation, the expectations are both comprehensive and ambitious. With strategic policy measures, the government has the opportunity to address key challenges, foster innovation, and position India as a global leader in the EV space. By aligning fiscal policies with the vision of a cleaner, greener future, the budget could pave the way for a sustainable transformation of the nation’s transportation landscape.
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