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Budget 2025: Greener Alternatives to Lower Production Costs, Automobile Sector Expectations from Nirmala Sitharaman

Budget 2025: Automobile sector expects reduced production costs, greener alternatives and EV infrastructure growth to drive sustainability and innovation in India’s auto industry.

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Budget 2025

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Budget 2025: The Union Budget for the fiscal year 2025-26, to be presented on February 1, 2025, by Finance Minister Nirmala Sitharaman, holds significant expectations for the automobile sector. With a focus on sustainability and reduced production costs, the automobile industry is looking forward to key reforms that will shape its future.

Simplifying GST for Vehicles and Components

One of the primary expectations from the Budget 2025 is the simplification of the Goods and Services Tax (GST) classification for vehicles and their components. The automobile sector believes that streamlining this process will reduce operational complexities, ultimately benefiting manufacturers and consumers alike. By making the classification more efficient, the government can help businesses thrive and foster smoother production flows.

Promoting Greener Alternatives through Tax Reduction

The automobile sector also anticipates a reduction in GST rates for hybrid and electric vehicles (EVs) under the upcoming budget. Currently, these vehicles are taxed at 28%, which could be brought down to 18%. This adjustment would encourage the widespread adoption of greener alternatives, supporting the government's vision for a more sustainable future. 

Boosting EV Production with Incentives

In line with promoting sustainability, the automobile industry expects Budget 2025 to introduce significant incentives for electric vehicle (EV) manufacturing. There are anticipations that the Production-Linked Incentive (PLI) schemes for EV components and batteries will be expanded, encouraging manufacturers to invest more in green technologies. With these expected reforms, India is likely to take a major step towards becoming a global hub for EV production.

Encouraging Research and Development for Advanced Mobility

Another key area where the automobile sector is seeking support is research and development (R&D) in hydrogen fuel and advanced mobility solutions. The Budget 2025 is likely to include provisions to promote research in these areas, which could pave the way for the next generation of clean energy solutions. Such innovations would significantly reduce the environmental footprint of the sector, further supporting the goal of achieving a greener, more sustainable future.

Enhancing Infrastructure and Scrapping Policies

The automobile industry is expecting increased investment in the development of EV charging infrastructure. As electric vehicles continue to gain popularity, reliable and accessible charging stations are anticipated to be crucial for their widespread adoption. Additionally, the industry expects the government to provide more clarity on policies to promote vehicle scrapping, which is expected to help boost demand for new vehicles and support the overall growth of the sector.

Automobile industry Budget
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