Auto Sector Budget 2026: Here’s how the auto sector has responded

Finance Minister Nirmala Sitharaman today presented the Union Budget 2026–27. This year, the budget places strong emphasis on higher capital expenditure, infrastructure creation, manufacturing-led growth, and long-term policy stability. Following the presentation, several leaders from the automotive industry have shared their views on how the budget could influence demand, investments and the sector’s overall growth trajectory.

Santosh Iyer, Managing Director and CEO, Mercedes-Benz India, welcomed the government’s infrastructure push, particularly its impact on mobility and premium vehicle demand. Speaking about the allocation of Rs 1 lakh crore towards capital expenditure, Iyer said, “Budget's strong focus on infrastructural development, with addition of Rs 1 lakh crore in capex, is a step in the right direction developing the country’s evolving mobility ecosystem. Better highways and improved intercity connectivity have historically driven luxury car demand in India.” He also pointed to the importance of fiscal discipline and export focus, adding that “the fiscal prudence reflected in the 4.3% deficit target, combined with strong focus on exports, sends a strong signal of macroeconomic stability”

Shailesh Chandra, President, SIAM and Managing Director and CEO, Tata Motors Passenger Vehicles Ltd, described the budget as a continuation of the government’s long-term growth agenda. He noted that the increase in capital expenditure to Rs 12.2 lakh crore for FY 2026–27 would stimulate industrial activity and demand across sectors, including automobiles. Chandra also underlined the importance of supply chain resilience, welcoming initiatives related to electronic components manufacturing, rare-earth processing corridors and container manufacturing. He further highlighted the allocation of 4,000 e-buses for the Purvodaya States as a meaningful step towards sustainable public transport.

Jyoti Malhotra, Managing Director, Volvo Car India, said the budget’s focus on sustaining economic momentum would help the mobility sector navigate global uncertainties. He noted that measures aimed at maintaining growth would support consumption, particularly in higher-value segments. Malhotra said, “The continued focus on maintaining and improving the current growth rate in the Union Budget 2026-27 should help the economy to enhance productivity and competitiveness, by building resilience to a volatile global economy,” adding that simpler taxation and customs processes would further support an upward economic trajectory.

From an auto components perspective, Ravi Mehra, Managing Director, Uno Minda, welcomed the government’s emphasis on advanced manufacturing and electronics. He highlighted the Rs 40,000 crore outlay under the Electronics Components Manufacturing Scheme and the launch of India Semiconductor Mission 2.0 as major steps toward strengthening domestic value chains. Mehra also pointed to rare-earth corridors and ease-of-doing-business reforms as key enablers for investor confidence.

Vijay Thakur, Co-Founder & CEO, Tsuyo Manufacturing, said, "We welcome the Union Budget 2026–27 and its strong focus on strengthening India’s manufacturing ecosystem and advancing Aatmanirbharta. The push for advanced electronics, rare-earth supply security, and EV component support will significantly benefit domestic electric motor manufacturing for two-wheelers, three-wheelers, and commercial EVs."

Dr. Uday Narang, Founder and Chairman, Omega Seiki Mobility, said that the focus on ease of doing business and MSME financing would lower cost barriers and improve supply chain resilience, creating the right environment for EV companies to scale innovation, deepen localisation and expand adoption across Tier-2 and Tier-3 markets.

Aravind Mani, CEO and Co-Founder, River Mobility, highlighted the importance of access to critical minerals and domestic processing. He welcomed the proposal to develop rare-earth corridors and cluster-based chemical parks, noting that stronger domestic chemical manufacturing would directly support batteries, components and advanced materials.

Ayush Lohia, CEO, YOUDHA, said “The continuation of customs duty exemptions on capital goods and lithium-ion cell components, along with incentives for critical mineral processing, will significantly reduce manufacturing costs and strengthen domestic value chains. These measures will help accelerate scale, improve global competitiveness, and reinforce India’s ambition to emerge as a self-reliant hub for advanced battery and EV manufacturing.”

Vaibhav Kaushik, co-founder & CEO of Nawgati added “For the mobility ecosystem, viewing fuel and charging access as an integrated national network aligns well with the Budget’s emphasis on sustainable and efficient infrastructure. From an industry perspective, the next phase will depend on execution clarity, common standards, and interoperable data systems that enable real-time visibility. If implemented effectively, these measures can reduce congestion and downtime, optimise fleet operations, and ensure that existing infrastructure delivers stronger economic and environmental outcomes.”