Agri focus, tax relief to create positive momentum for auto sector

Auto industry body SIAM noted that the government is focused on long-term sustained economic growth.

The budget’s focus on agriculture and tax relief for individuals is likely to spur demand triggering a positive effect on the automobile industry, industry players said on Saturday.

Auto industry body SIAM noted that the government is focused on long-term sustained economic growth. "The specific focus on rural prosperity and agriculture, coupled with reforms in the personal income tax, is likely to have a positive effect on the auto Industry, and will help in creating demand,” SIAM President Shailesh Chandra said in a statement.

As the industry transitions into cleaner powertrains, it will specifically benefit from the National Manufacturing Mission, which supports clean tech manufacturing for batteries, motors and controllers, he added. ”Furthermore, the exemption of critical minerals (e.g. Cobalt, Lead, Zinc etc.), scraps of Lithium-ion battery, and 35 additional capital goods from customs duty will help create a strong EV ecosystem in the country,” Chandra said.

The industry is also thankful to the government for creating a high-level committee for regulatory reforms, aimed at reviewing regulations, certifications, licenses, and permissions, as this will certainly help in ease of doing business, he added.

"The focus on MSMEs, innovation, exports and supply chain resilience will provide a strong impetus to the auto component industry. Further, the proposals for personal Income Tax will put more money in the hands of people thus fuelling consumption and leading to economic growth,” ACMA President Shradha Suri Marwah stated.

Hero MotoCorp Executive Chairman Pawan Munjal said the Union Budget 2025 fuels India’s growth engines with a bold push for manufacturing, green mobility, and rural empowerment driving innovation, job creation, and global leadership. ”The automobile sector stands poised for a significant leap forward, with substantial investments in green energy and a clear policy framework to support energy storage solutions. These measures will accelerate India’s transition to a clean mobility future, reinforcing its commitment to sustainability and technological innovation,” he added.

Mahindra Group CEO & MD Anish Shah said the budget will encourage private sector capex to move in a positive direction. ”The theme of ”Make in India for the world” remains a key focus in this budget, with efforts to reduce India’s manufacturing costs poised to significantly enhance the country’s global competitiveness,” he added. Tata Motors Executive Director Girish Wagh said the removal of basic customs duties on key materials for battery manufacturing is a strategic move to boost domestic EV production, foster a sustainable ecosystem, and drive India’s transition to a greener economy. Mercedes-Benz India MD & CEO Santosh Iyer said the budget will send a strong positive signal to the industry, reinforcing confidence in the ’India Growth Story’, and paving the way for sustained investment and future expansion. ”India has long been regarded as a niche garden with high fences, however, this budget is expected not only to enrich the garden by stimulating consumption and strengthening the MSME sector, but also lowering the fences, through tariff rationalisation and adoption of international practices on transfer pricing, with a clear commitment to enhanced global trade integration,” he stated.

Narayan Subramaniam, CEO & Co-Founder, Ultraviolette Automotive Pvt. Ltd, said,"We are enthused to see the Union Budget 2025-26 prioritizing clean technology and domestic manufacturing, especially in the electric vehicle sector. Increased infrastructure investment and incentives for electric mobility will strengthen our efforts to develop eco-friendly mobility solutions. The inclusion of 35 capital goods for EV battery manufacturing in the exemption list is a transformative move, significantly reducing production costs and fostering innovation in lithium-ion battery production. Furthermore, the full exemption on critical minerals like cobalt powder and lithium-ion battery scrap ensures a steady supply of essential resources, thereby boosting local production and job creation in the clean tech sector. As an electric vehicle manufacturer, we are particularly encouraged by the budget's focus on enhancing the domestic production of key components such as batteries, motors, and controllers. This initiative will not only strengthen India's EV ecosystem but also enable us to build a more resilient local supply chain. This budget not only empowers the aspiring MSMEs financially but also encourages the adoption of cleaner alternatives, paving the way for a greener future."

Udit Sheth, Vice Chairman, Setco Auto Systems Pvt Ltd said,“The Union Budget is robust and with the interventions within it will spur multifaceted growth and consumption. Overall this will positively impact our economy, drive logistics and transport activities that will in turn benefit our MHCV sector. Exciting days ahead!”

Vikram Mohan, Managing Director, Pricol Limited said,"The Union Budget 2025-26 lays a strong foundation for India’s automotive sector, emphasizing growth, innovation, and global competitiveness. For Pricol, reduced customs duties on electronic components could provide a boost considering our large electronics purchasing and consumption in our class of products. We see this budget as an enabler for transforming India into a key hub for high-value automotive electronics oriented manufacturing."

Mahesh Babu, CEO of SWITCH Mobility said, "India's FY25-26 budget targets economic growth with a 4.4% fiscal deficit and income tax cuts, including exemptions for individuals earning up to ₹12 lakh boost disposable income, consumer spending benefiting sectors like commercial vehicles with higher logistics demands. The budget also simplifies duties and taxes to support MSMEs, startups, and entrepreneurship."

The exemption of customs duties on lithium-ion batteries and critical minerals such as cobalt, zinc, and lead represents a crucial step in reinforcing India’s electric vehicle (EV) ecosystem. This move will enhance the competitiveness of the EV industry, helping it to grow more rapidly and become a key player in the global market. It accelerates India’s progress toward Aatmanirbharta in clean energy and sustainable mobility solutions. These measures are expected to reduce the overall cost of EVs, making them more affordable for consumers, which directly supports the government’s ambitious target of achieving 30% EV adoption by 2030."

Finance Minister Nirmala Sitharaman on Saturday proposed to extend duty exemptions on capital goods used in the production of lithium-ion batteries. The move is aimed at aiding domestic manufacturing of lithium-ion batteries, a key component in electric vehicles. Toyota Kirloskar Motor Country Head and Executive Vice President – Corporate Affairs and Governance Vikram Gulati said the increased allocation for capital expenditure demonstrates the government’s persistent commitment towards infrastructure modernisation, a crucial factor in accelerating growth across industries and improving their competitiveness, including the automotive sector. ”Further, the inclusion of 35 additional capital goods for EV battery manufacturing is an important step towards localising lithium-ion battery production which will help in lowering import dependency, and further strengthening India’s energy security goals,” he added.

Renault India Country CEO and MD Venkatram Mamillapalle said by prioritising rural development, tax reforms, and clean-tech manufacturing, the budget lays a strong foundation for a greener, more prosperous future. Ashok Leyland Executive Chairman Dheeraj Hinduja said the launch of the National Manufacturing Mission will support the sector by providing crucial policy backing, execution plans, and a governance and monitoring framework. Volvo Car India MD Jyoti Malhotra said that by focusing on demand-side incentives, without placing an undue burden on taxpayers, the budget seeks to create a favourable environment for EV growth.

JSW MG Motor India CEO Emeritus Rajeev Chaba said the government’s focus on enhancing domestic manufacturing capabilities and battery production will help India’s emerging EV market and boost local manufacturing. JK Tyre & Industries Chairman & MD Raghupati Singhania said the thrust on green energy transition, manufacturing and ease of doing business will propel the automotive and tyre industries forward. Apollo Tyres Chairman Onkar Kanwar said the Union Budget 2025-26 is growth-centric, reinforcing the government’s commitment to strengthening India’s manufacturing sector and driving the evolution to cleaner mobility solutions.

*With Agency Inputs