What auto & EV industry wants from union budget 2026

The auto and EV (electric vehicle) sectors are undergoing transformative changes in India, driven by rising demand for energy-efficient transportation options. With the government’s push towards sustainability and reducing carbon emissions, the Union Budget 2026 will play a major role in shaping the future of this industry. 

Policy Continuity and Long-term Clarity for EVs

The EV industry is hoping for continued fiscal incentives and tax relief to support growth. Electric Vehicles have gained significant traction in India, but for the sector to truly take off, the industry needs more clarity in long-term policies. One key expectation is GST rate rationalisation, which could help make EVs more affordable.

Along with tax incentives, there is a strong push for charging infrastructure support to encourage wider EV adoption. EV manufacturers like Tata Motors, are calling for a comprehensive roadmap for charging stations across urban and rural locations, as well as tax incentives for local EV manufacturers.

Rationalisation of Duties on Auto Parts

For auto manufacturers to maintain a competitive edge, the duty structure on auto components needs to be rationalised. Industry leaders argue that tariff structure uncertainty has slowed the adoption of new manufacturing technologies. By simplifying GST rates on auto parts, the government can make domestic manufacturing more attractive and globally competitive.

The Federation of Indian Chambers of Commerce & Industry (FICCI) has also pushed for clarity in the duty treatment for imported components, especially with the rise of hybrid vehicles and electric cars.

Rural Demand Stimulation for Automobiles

Rural India represents a significant untapped market for the auto industry, and industry leaders are looking to stimulate demand through subsidised financing for rural buyers. A large portion of vehicle sales still comes from urban areas, so there is an expectation of policy measures to encourage rural vehicle ownership with low-interest loans and affordable EV financing options.

Industry stakeholders also expect the Union Budget 2026 to balance support for conventional vehicles that run on petrol (gasoline), diesel, or CNG & has more demand in rural India. This includes targeted tax, duty, and incentive measures that can make ownership more affordable while sustaining investments in new technologies.​

Supporting Auto Demand in a Changing Market

Traditional auto players are seeking a supportive macro environment that keeps retail demand steady, especially in entry-level and rural-focused segments. They want measures that put more disposable income in consumers hands such as tax reliefs which is seen as important indirect drivers of vehicle sales.​

The industry also expects continued emphasis on road and highway expansion, which historically supports commercial vehicle and passenger car demand. 

Battery, Charging and Clean Mobility Infrastructure

Auto and energy players stress that EV adoption depends heavily on reliable charging infrastructure and domestic battery capabilities. Expectations from the Budget include support for public and private charging networks, incentives for battery manufacturing and storage solutions, and complementary investments in grid upgrades.​

A more integrated view of clean mobility linking vehicles, charging, power supply, and urban planning is increasingly part of the industry’s wish list. Policy measures that align energy, transport, and city planning can accelerate the shift to cleaner fleets in both passenger and commercial categories.​

Tax and Duty Rationalisation for the Auto & EV Ecosystem

Manufacturers and parts suppliers are seeking rationalisation of GST and customs duties on EV components, batteries, and critical auto parts to lower overall costs. Calibrated duty structures that encourage localisation while keeping key inputs affordable remain a key expectation.​The sector is also interested in clarity on incentives for scrappage policies, cleaner fuel use, and adoption of advanced safety and emission technologies. Well-crafted tax and duty policies can help Indian players compete globally while meeting environmental goals.​

Skilling and R&D for Future Mobility

As vehicles become more software-driven and connected, the auto and EV ecosystem needs a workforce skilled in electronics, software, AI, and battery technologies. Industry bodies expect the Budget to support skilling and upskilling programs that address these emerging needs.​

At the same time, companies are seeking stronger R&D incentives for clean mobility technologies, including EV platforms, hydrogen mobility solutions, and advanced driver-assistance systems. By backing both talent and innovation, Union Budget 2026 can help India position itself as a key player in the global mobility transition.

Union Budget 2026 presents a crucial opportunity for the auto and EV industries to thrive. The EV industry looks forward to policy stability, tax relief, and continued incentives for local manufacturing, while the auto sector seeks clearer duty structures and policies that stimulate demand in rural areas. With the right support, this sector can continue driving India’s move toward a greener, more sustainable future.