As the Union Budget 2025 approaches, leaders in the automotive and mobility sectors are calling for policies that prioritise affordability, innovation, and inclusivity to propel the industry forward. Industry leaders urged the Finance Minister Nirmala Sitharaman to look at the need for tax reforms, support for rural and urban mobility solutions, and measures to drive the adoption of electric vehicles (EVs).
Narain Karthikeyan, Founder, DriveX, pointed out the differing trends in urban and rural demand for automobiles, underscoring the need for targeted measures. “Rural demand is picking up, while urban demand is slowing. A friendlier tax regime to boost disposable income in urban areas would be a good start,” he said.
Karthikeyan also advocated for initiatives like interest subsidies on refurbished vehicle loans and reducing GST on refurbished vehicles to make mobility affordable for middle- and lower-income groups. These steps, he argued, would not only benefit consumers but also reinforce the circular economy.
Karthikeyan further stressed the importance of policies that encourage innovation and growth in the automotive and tech sectors. He suggested easing compliance norms and extending financial support to startups, particularly those operating in unorganised sectors and expanding into tier-2 and tier-3 cities.
“Providing incentives for rural mobility solutions and fostering job creation through skill development programmes for refurbishment professionals could drive economic inclusivity,” he added. Recognising the contributions of gig workers, he said, would uplift the workforce and foster sustainable mobility across regions.
Meanwhile, the focus on green technology and EV adoption remains a pressing concern. Pulkit Khurana, Co-Founder, Battery Smart, said that EV sales in 2024 witnesssed impressive growth, with over 14.08 lakh units sold, achieving a market penetration rate of 5.59%, up from 4.44% the previous year. Despite this progress, Khurana pointed to a key hurdle hindering widespread EV adoption: the disparity in GST rates.
“Currently, EVs with lithium-ion batteries attract a GST of 5%, while standalone batteries face a much higher rate of 18%,” he noted. This discrepancy, he explained, places a financial burden on commercial EV drivers, particularly electric three-wheelers and gig workers who play a crucial role in India‘s EV ecosystem.
Khurana called on policymakers to align the GST on standalone batteries with that of EVs at 5%, a move that he believes would significantly reduce costs for commercial drivers and make EVs more accessible. “This adjustment would ensure the benefits of clean mobility reach the grassroots and drive widespread adoption,” he said.
Both Karthikeyan and Khurana emphasised the importance of a forward-looking Union Budget 2025 that supports green technology, digital advancements, and pro-business reforms. Such measures, they believe, would not only bolster the automotive sector but also ensure mobility becomes more inclusive and sustainable for all.
