The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman on February 1, 2025, brings significant policy changes for the automotive industry. With a strong focus on electric vehicles, local manufacturing, and infrastructure development, the budget aims to drive growth, innovation, and sustainability in the sector.
Let us explore how these budgetary changes will shape the future of the automotive industry, driving growth, innovation, and sustainability in the coming years.
Key announcements for the automobile sector
The Union Budget 2025 introduces key reforms for the automobile sector, focusing on EV adoption, manufacturing growth, tax relief, and infrastructure development.
Key Announcements:
- EV boost: Import duties on 35 key EV battery components removed to lower production costs.
- Funding for EVs: ₹2,819 crore allocated under the Auto PLI scheme to support local manufacturing.
- Public transport electrification: ₹4,500 crore set aside for the PM E-Drive Scheme to expand EV infrastructure.
- MSME support: Investment limits increased by 2.5 times, making more auto component manufacturers eligible for benefits.
- Tax benefits: The tax-free income slab raised to ₹12 lakh, boosting disposable income and car sales.
- Luxury car market: Import duties reduced from 125% to 70%, making high-end cars more affordable.
- Simplified taxation: Customs tariffs reduced to eight categories, improving trade efficiency.
These measures are expected to make vehicles more affordable, strengthen domestic production, and promote sustainable mobility in India.
Budget 2024 and Budget 2025: Key comparisons
The Union Budgets of 2024 and 2025 introduced key measures impacting India’s automobile industry, focusing on EV growth, domestic manufacturing, and tax reforms.
Budget 2024:
EV Battery Support: Extended customs duty exemptions on key minerals for battery production.
Manufacturing Boost: ₹3,500 crore allocated for auto and component sectors; ₹7,000 crore for semiconductor and display manufacturing.
Budget 2025:
EV Industry Growth: Exempted customs duty on 35 capital goods for battery production and key EV components.
Tax Reforms: Income tax relaxations to boost consumer spending and vehicle demand.
Clean Technology Push: Incentives for domestic manufacturing of EV motors, controllers, and batteries.
While Budget 2024 focused on strengthening manufacturing, Budget 2025 expanded support with cleantech initiatives, tax relief, and EV growth incentives.
Future trends in the automobile sector after budget 2025
The Budget 2025 is set to reshape the automobile sector with a strong focus on EV adoption, local manufacturing, and smart technology. These changes will make vehicles more affordable, efficient, and eco-friendly.
With lower import duties and expanded charging infrastructure, EVs will become more accessible. Government incentives for clean energy vehicles will also reduce prices, encouraging more buyers to switch to electric and hybrid cars.
Support for domestic production of auto parts, batteries, and semiconductors will boost local manufacturing, creating jobs and reducing dependency on imports. Additionally, investments in AI and automation will lead to smarter, safer, and more connected vehicles.
Final thoughts:
The Union Budget 2025 sets the stage for a dynamic shift in the automotive industry, focusing on sustainability and technological advancement. The emphasis on EV adoption, local production, and infrastructure growth will drive long-term progress.
Overall, the budget paves the way for a more efficient, competitive, and eco-friendly automotive sector, shaping the future of transportation in India.
