The Union Budget 2025, presented by Finance Minister Nirmala Sitharaman, underscores India's commitment to boosting its electric vehicle (EV) industry. The government aims to accelerate EV adoption by increasing domestic battery production, revising customs duties, and expanding incentive schemes.

Strengthening India's EV Ecosystem

To reduce reliance on imports and encourage local manufacturing, the government is expanding lithium-ion battery production with 35 new capital goods categories for EV battery manufacturing. Additionally, a reduction in Basic Customs Duty (BCD) on key battery production components will lower costs for manufacturers.

Tax Relief and Potential Impact on EV Sales

A key budget highlight is the increased income tax exemption limit to ₹12 lakh, boosting disposable income for middle-class consumers. This could positively impact EV adoption, as more individuals may now consider switching to electric vehicles.

Key Announcements for the Auto & EV Industry

EV Component Development & Manufacturing

• A National Manufacturing Mission will be launched to strengthen domestic production of essential EV components like batteries, motors, and controllers.
• The PM eDrive Scheme has received a funding boost to ₹40 billion, up from ₹39 billion last year.
• The PM eBus Scheme has been allocated ₹5.1 billion, a massive jump from ₹0.2 billion last year, pushing for better EV public transport.

Incentives & PLI Scheme

• Auto & Components PLI: Increased to ₹28.2 billion (previously ₹3.5 billion).
• ACC (Advanced Chemistry Cell) Batteries PLI: Now ₹1.6 billion (up from ₹0.2 billion).

The Road Ahead

With a strong focus on local manufacturing, policy incentives, and infrastructure growth, India's EV sector is set to gain momentum. However, further clarity on long-term subsidies and faster charging infrastructure development will be crucial to sustaining this growth.