With tax breaks on battery materials, Budget 2025 sees a 20% boost to e-mobility funds and strong support for MSMEs and local innovation. Industry welcomes the changes.
In the latest Union Budget, Finance Minister Nirmala Sitharaman introduced measures that promise to significantly impact India’s electric vehicle (EV) sector. Key announcements include the removal of basic customs duty (BCD) on vital minerals for EV battery production, such as cobalt powder, lithium-ion battery scrap, lead, and zinc.
The Budget also marks a notable shift in focus towards e-mobility, with schemes promoting electric mobility seeing a 20% increase, rising from almost ₹44.35 billion in 2024-25 to ₹53.22 billion in the current fiscal.
The Prime Minister’s E-DRIVE Scheme, aimed at supporting EVs and public charging infrastructure, has witnessed a significant boost of over 114%, now standing at ₹40 billion for FY26. These investments are designed to make EVs more accessible, spurring the growth of India’s EV ecosystem.
The removal of the BCD is expected to reduce the cost of EV batteries, making electric vehicles more affordable and further aligning with the government’s goal of increasing EV adoption.
These tax incentives, alongside a reduction in import duties on battery manufacturing materials, are intended to foster local manufacturing and enhance India’s domestic production capabilities.
The automotive industry also commended the announcement of the National Manufacturing Mission and support for startups and MSMEs (micro, small, and medium-sized enterprises).
“MSMEs have long been the backbone of our EV industry, and this budget recognises their role by offering targeted incentives, skill development programs, and infrastructure support—giving them the tools they need to scale and innovate,” stated Maxson Lewis, Founder and CEO of Magenta Mobility.
Following the 2025 Budget announcement, investment experts, including small case managers, Sebi-registered research analysts, and advisors, have pinpointed key sectors for investment, EV being one of them.
The increase in capital expenditure, projected to surpass $1.2 trillion by 2030, is expected to benefit banks and infrastructure-focused non-banking financial companies (NBFCs). Other promising sectors include urban housing, insurance, and defence, driven by long-term policy support.
