Budget 2025: Transforming India’s automotive sector towards a sustainable future

Santosh Iyer, MD & CEO of Mercedes-Benz India, highlights India's automotive industry momentum towards sustainable mobility. The focus is on infrastructure expansion for EV charging, investing in R&D, reducing taxes to boost consumer spending, and developing a skilled workforce to support electric vehicles.
Budget 2025: Transforming India’s automotive sector towards a sustainable future
Santosh Iyer, Managing Director & CEO, Mercedes-Benz India.
This article is authored by Santosh Iyer, Managing Director & CEO, Mercedes-Benz India.
As we step into 2025, I find myself reflecting on the incredible momentum the Indian automotive industry has gained over the past years, and Bharat Mobility Global Expo 2025 is an apt showcase of this momentum. The global expo brought together all the key industry players to showcase the future of mobility in India. It was incredible to see firsthand, the Indian auto industry come together in its transition to green mobility, with the global expo unveiling 90 new vehicles, across diverse powertrains, underscoring the industry’s determined move towards sustainable technologies. Reiterating our commitment to sustainable mobility, Mercedes-Benz showcased the G 580 with EQ Technology, the CLA Class concept, and the EQS Maybach SUV 680 ‘Night Series’, with significant interest from the visiting audience and customers.
With Bharat Mobility 2025 behind us, we now have the Union Budget 2025 all set to be presented on February 1, and India’s automotive industry which is at a pivotal point in its transition towards green mobility, will watch the Union Budget with eagerness and anticipation. India, as the world’s third-largest automobile market, is primed for significant growth, particularly in BEV (Battery EVs) segment. We hope for a combination of forward-looking measures and continuation of existing incentives from the budget, that will foster sustainable economic growth and also enhance India’s global competitiveness, with a clear roadmap for sustainable mobility.
Mercedes-Maybach GLS 600 at BMS 2025.

A Forward-Looking Approach: Building on Existing Measures


India's transition to sustainable mobility will benefit greatly from any forward-looking measures in the budget that can foster economic growth and enhance global competitiveness. Reinforcing existing incentives, developing necessary infrastructure, and advancing research and development (R&D) initiatives are key for continued growth. The automotive sector is undergoing a transformative shift, and such measures will help accelerate the adoption of green mobility while driving forward India’s vision to be a key player in the global value chain.

Charging Network Infrastructure: The Backbone of EV Growth


Despite progress, a robust and fully operational and functional charging infrastructure remains a distant reality, challenging BEV adoption. The upcoming Union Budget must prioritize the expansion of EV charging networks by classifying charging infrastructure as part of the "infrastructure industry." This will unlock access to cheaper financing options and reduce the cost of setting up charging stations. Additionally, integrating Charging Point Operators (CPOs) into priority sector lending can further accelerate the growth of this network.
As I say, India needs an UPI moment in public charging that can solve the charging related complexities. A standardized, user-friendly interface for charging stations, similar to UPI for digital payments, would simplify the consumer experience, boosting the convenience of BEV adoption. Creating a clear roadmap for infrastructure development will eliminate current bottlenecks and accelerate the transition to electric mobility.

Driving Innovation: Investing in R&D and Domestic Supply Chains


As India looks to strengthen its position in the global automotive market, investing in R&D for advanced automotive technologies is essential. This focus will not only reduce India’s reliance on imports but also drive innovation within the domestic automotive ecosystem. To encourage such advancements, the government should offer grants and tax incentives for public-private partnerships in R&D, following successful global models. The government can also enhance India’s integration into global supply chains by reducing trade barriers. Streamlining regulatory frameworks and reducing the cost of doing business will further attract investments and promote innovation in EV.

Revision of existing taxation: A Vision for the Future prosperity


To curb inflation and boost disposable income, reducing individual tax rates or revising tax slabs can significantly help household. Salaried individuals face the brunt of both direct and indirect taxes; hence reducing direct taxes will increase disposable income, helping to offset indirect taxes by higher purchases and riving consumption. This can have a multiplier effect on the overall economy with enhanced consumption of goods and services.

Increased capex on infrastructure development:


A world-class road infrastructure is critical for the growth of the country’s economy, passively benefitting the automotive industry as well. The Union Budget last year allocated 3.4% of the country’s GDP or Rs. 11 lakh crores, as capex towards infra development, aimed towards boosting road, railways, power and defense sectors. We expect the Govt to maintain its focus and fiscal support towards infrastructure creation, which will support economic growth by creating demand and paving way for a long-term growth. In addition to road infra, we expect focus to continue on developing integrated transport systems, sustainable smart cities and industrial parks that trigger economic growth and employment generation.
GLA Concept

Skill Development: Preparing for the Future


With the rise of EVs, there is an increasing need for a skilled workforce capable of supporting the next generation of vehicles. The government must continue to prioritize vocational training programs and digital integration to ensure a future-ready workforce. By focusing on skill development, we can create new jobs in this high-growth sector and ensure the availability of qualified technicians to service EVs and advanced technologies.

Boosting Consumer Demand: Education and Incentives


For EVs to gain broader consumer acceptance, we need continued efforts to educate the public on the benefits of electric mobility. The Union Budget could extend the benefits for deduction of interest paid on EV loans and accelerate income tax depreciation for early adoption. These initiatives would not only make EVs more affordable but also help consumers understand the long-term savings and environmental benefits of electric mobility.

Building a Resilient, Sustainable Future


The Union Budget 2025 offers a unique opportunity to reshape India’s automotive sector with a focus on sustainability, innovation, and infrastructure development. By continuing to support BEV adoption, expanding charging infrastructure, incentivizing individuals by interest deduction and accelerated depreciation under income tax, rationalizing GST rates, and investing in skill development, the government can accelerate the transition towards a greener, more sustainable transportation ecosystem.
Targeted investments in R&D, infrastructure, and a favorable tax environment will not only drive the growth of the electric vehicle market but also bolster India’s competitiveness on the global stage. With the right policy measures, India can lead the charge towards a sustainable automotive future, ensuring long-term growth and economic resilience for the sector.
Disclaimer: Views and opinions expressed in this article are solely those of the original author and do not represent any of The Times Group or its employees.
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