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Union Budget 2026-27 has arrived at a crucial time for India’s automotive industry. The industry is currently facing slowing demand in some vehicle segments, a fast-growing electric vehicle (EV) market, and increasing competition from global players. Perhaps more importantly, the budget provides signals on manufacturing, infrastructure, clean mobility, and supply chain development that the automotive industry has been closely watching.
Industry leaders from across India’s automotive ecosystem have shared their responses to the budget and how it could affect growth, costs, EV adoption, and long-term competitiveness.
Shailesh Chandra, President of SIAM and MD & CEO of Tata Motors Passenger Vehicles, said,
“We welcome the Union Budget 2026–27, which continues to focus on long-term, sustained economic growth with a strong emphasis on manufacturing, infrastructure including freight corridors & waterways and fiscal prudence. The decision to raise the capital expenditure target to Rs 12.2 lakh crore for FY 2026-27 from Rs 11.2 lakh crore in the current year will provide a strong impetus to demand creation and industrial activity, including the Automobile sector.
Enhanced support for electronic components manufacturing, setting up dedicated corridors for mining and processing of rare earth, along with initiatives to establish high-tech tool rooms and supporting container manufacturing, will develop supply chain resilience and help in streamlining exports. The allocation of 4,000 e-buses for the Purvodaya States will accelerate the transition toward sustainable public mobility solutions.
Continued exemption of Basic Customs Duty on Capital Goods used for manufacturing lithium-ion batteries, along with the extension of concessional duty benefits for lithium-ion cells and their parts used in manufacturing batteries for electric and hybrid vehicles for a further two years till March 2028, will enable creation of a robust EV ecosystem in the country.”
Commercial Vehicle Manufacturers See Opportunities in EV Growth
Dr. Uday Narang, Founder and Chairman of Omega Seiki Mobility, remarked,
"The Union Budget 2026–27 marks a decisive shift in making India a global hub for smart and sustainable mobility. The strong push on advanced manufacturing, AI-led technologies, electronics and semiconductor expansion, rare-earth and battery supply chains, the Rs 10,000 crore SME Growth Fund, and higher public capex will significantly strengthen the EV ecosystem. What stands out is the focus on ease of doing business and MSME financing, which lowers cost barriers and improves supply-chain resilience. For companies like Omega Seiki Mobility, this creates the right environment to scale innovation, deepen localisation, expand charging and logistics infrastructure, and accelerate EV adoption across Tier-2 and Tier-3 markets. Together, these measures position India not just as a large EV market, but as a competitive global export base for clean, tech-driven mobility solutions.”
Nishant Arya, Vice Chairman of JBM Group, also expressed optimism:
"Budget 2026–27 sends a strong signal that India wants to build deep domestic capability across the new industrial value chain, from critical minerals and rare earth magnets to advanced batteries, power electronics and cleaner logistics. By announcing rare earth corridors, ISM 2.0, incentives for processing critical minerals and duty relief on capital goods for lithium‑ion cell and storage manufacturing, the government is reducing long‑term supply-chain risk for industry and opening up a major growth runway for Indian manufacturers.
For JBM Group and the broader mobility and energy ecosystem, the announcements towards deployment of 4000 e-buses towards decarbonising the northeast region, semiconductor ecosystem development, container manufacturing scheme and strengthened MSME growth funds provide the kind of industry-specific stimulus that will help boost manufacturing competitiveness and generate employment across value chains.
What is equally important is the sharp focus on ‘champion’ MSMEs through the SME Growth Fund, a strengthened TReDS ecosystem and easier access to working capital, which can significantly strengthen Tier‑II and Tier‑III enterprises that support sectors like automotive and clean mobility.
We believe this budget strikes a pragmatic balance between fiscal prudence and growth orientation and sets the stage for sustained investment, skills development and broad-based prosperity towards building a self-reliant India."
Ayush Lohia, CEO of YOUDHA, added,
“The continuation of customs duty exemptions on capital goods and lithium-ion cell components, along with incentives for critical mineral processing, will significantly reduce manufacturing costs and strengthen domestic value chains. These measures will help accelerate scale, improve global competitiveness, and reinforce India’s ambition to emerge as a self-reliant hub for advanced battery and EV manufacturing.”
In addition, Divya Chandra, MD of Atul Greentech, said,
"Union Budget 2026–27 sends a strong and confident message that electric mobility is integral to the vision of Viksit Bharat. Continued tax support for EVs, focused incentives for domestic battery manufacturing, and investments in public electric transport and charging infrastructure collectively strengthen the foundation of a self-reliant, future-ready mobility ecosystem. These measures will accelerate adoption, deepen localisation, and empower Indian manufacturers to innovate and scale globally—driving cleaner growth, energy security, and sustainable livelihoods for the next generation.”
Dr. Sudhir Mehta, Founder and Chairman of EKA Mobility, explained,
"The Union Budget 2026 reinforces India’s resolute commitment to building a sustainable, future-ready mobility ecosystem, and places clean transportation firmly at the centre of the country’s development agenda. The Government’s plan to deploy 4,000 electric buses across multiple regions is a clear endorsement of public transport electrification as a scalable solution to rising urban congestion, emissions and mobility demand. Large public fleet adoption is often the tipping point for wider EV acceptance, and this move strengthens confidence across the electric mobility value chain. While these buses are part of mainstream public transport, their deployment across emerging connectivity and tourism circuits will also play a critical role in improving access to key destinations and regional hubs.
The Budget’s emphasis on transport-led growth through seven high-speed rail corridors, including key routes such as Hyderabad–Bengaluru and the strategically significant Mumbai–Pune railway corridor, along with dedicated freight corridors like Dankuni–Surat, reflects a broader shift towards cleaner and more efficient intercity and regional connectivity. These investments are closely aligned with the Government’s focus on boosting tourism by improving access to major economic centres, pilgrimage circuits and emerging travel destinations. Seamless, low-emission mobility is essential to making tourism more accessible, sustainable and resilient.
Public capital expenditure rising to Rs 12.2 lakh crore, complemented by the proposed Infrastructure Risk Guarantee Fund, further strengthens the investment environment for large-scale transport and EV infrastructure projects. Risk-mitigated financing is critical for accelerating deployment across commercial and mass mobility segments."
Nirmal Reddy, President of ETO Motors, highlighted the role of technology:
“Union Budget 2026-27 clearly highlights the role of digital and technology infrastructure in shaping India’s next phase of growth. The emphasis on data centres, cloud services and integrated logistics creates a strong foundation for scalable, connected and software-driven electric mobility solutions. As EV adoption expands, seamless data management, real-time intelligence and platform-led operations will be central to improving efficiency, reliability and customer experience.
The IT sector reforms, particularly the rationalisation of transfer pricing safe harbour norms, are a welcome move to reduce compliance complexity and encourage greater investment in technology, AI-driven platforms and global capability centres. This will further strengthen India’s position as a preferred destination for digital innovation.
The Rs 40,000 crore allocation under the India Semiconductor Mission 2.0 is a strategically significant step. By strengthening capabilities in chip design, R&D and talent development, the Budget enhances resilience across technology supply chains and accelerates progress in intelligent mobility, advanced computing and smart energy systems. Overall, the Budget adopts a forward-looking, ecosystem-led approach that supports sustainable, technology-enabled mobility growth.”
Overall, the Union Budget 2026-27 sends a clear message that India is serious about clean mobility, EV adoption, and building a strong industrial ecosystem. Several key initiatives stand out:
Perhaps most importantly, the budget balances growth with fiscal prudence, creating opportunities for Indian manufacturers, technology companies, and clean mobility startups. By supporting innovation, local manufacturing, and EV adoption, the government is laying the groundwork for India to become a global hub for sustainable automotive solutions.
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