Budget 2025 expectations: Auto industry seeks support for growth and innovation

As India prepares for the Union Budget 2025, the automotive sector anticipates key measures to accelerate growth, innovation, and sustainability. With the push for electric vehicles (EVs) gaining momentum and the industry's focus shifting toward greener technologies, stakeholders are looking for incentives to support the transition to EVs, boost local manufacturing, and address challenges like high input costs and supply chain disruptions. The budget is expected to play a crucial role in shaping the future of India's auto industry, especially in terms of policy support, infrastructure development, and tax reliefs to foster both domestic and global competitiveness. Here’s a look at what the automotive industry expects from the 2025 budget.Mr. Venkatram Mamillapalle, Country CEO and MD, of Renault India, said, "We appreciate the government has been taking a holistic approach toward economic development, particularly their commitment to building an ecosystem that balances growth with sustainability. We are optimistic that the Government will further push its vision towards building a robust supply-chain ecosystem and innovation hub to the next level by strengthening skill development, encouraging ER&D and enhancing ease of doing business. We also expect to see the next set of steps that will pave the way towards sustainability and carbon neutrality targets. We are optimistic that the upcoming budget will encourage simplification of taxes on new energy vehicles, address the personal income tax concerns, and take appropriate measures towards the upliftment of the middle-income group, enhancing liquidity and consumer sentiment. We are confident that India will further take the lead in all sectors in line with Viksit Bharat 2047 vision,” Mr. Vikram Gulati, Country Head and Executive Vice President - Corporate Affairs and Governance, at Toyota Kirloskar Motor, said, “Government’s commitment towards modernising infrastructure through sustained investments has boosted economic growth and has also helped lower logistic costs. The Production Linked Incentive (PLI) Schemes by the Government have facilitated investments in key sectors and cutting-edge technologies. This has helped enhance efficiencies and gain economies of scale thereby contributing to improving Indian industry's global competitiveness. These measures have been accompanied by a continued focus on maintaining prudent fiscal discipline.In the upcoming budget, we hope for sustained focus on infrastructure spending and enhancing the scope of PLIs. With regards to the automotive sector, India is now on the verge of achieving the target of E20 (20% ethanol blending) in the shortest timeframe, globally. This will substitute significant fossil fuel imports with indigenous Biofuel (Ethanol) sourced from our farmers and result in a lowering of carbon emissions. Further, the sales of electrified technologies are also increasing rapidly. Moving ahead, we request the Government for appropriate merit-based policies that support and help in popularising the full range of greener technologies and alternative fuels thereby helping in faster and greater adoption of multiple sustainable mobility solutions. Further, measures to encourage the scrappage of old vehicles through the budget will also boost demand for newer generation vehicles and eliminate the polluting ones. We also urge the Government to prioritize measures aimed towards enhancing the skilling of youth, supporting MSMEs, promoting R&D and encouraging innovation as well as investing in strengthening the education system for realising the dream of a Viksit Bharat.”Samir Gupta, Managing Director - Continental Tires India said, The Indian tyre market is on a strong growth trajectory, projected to reach USD 21.27 billion by FY2030 from USD 11.98 billion in FY2024. This is further aided by the recent efforts to enhance natural rubber supply through plantations under the INROAD (Indian Natural Rubber Operations for Assisted Development). We hope the Union Budget 2025 will further focus on increased funding for natural rubber plantations to ensure a steady supply of raw materials, particularly in underutilized regions of India. This would help address the persistent raw material shortages and reduce reliance on imports. Moreover, lowering import duties on natural rubber and other raw materials is another crucial step that would enhance cost-efficiency, making domestic production more competitive globally.The industry is also looking for rationalized GST rates on essential tyre manufacturing components, which would reduce production costs. Continued support under the Production-Linked Incentive (PLI) scheme is vital to strengthen the "Make In India" initiative, boosting domestic production and innovation.As per CRISIL, despite recent uncertainties surrounding EV policies, the Indian automotive sector is set to generate ₹4.1 lakh crore in green investments by 2030. The report also expects 17-20% electrification in electric PVs. This rapid adoption of electric vehicles presents a unique opportunity for the industry. Increased government support for research and development in this area, alongside policies promoting EV infrastructure, would be instrumental in driving innovation in the automotive industry and, subsequently, in the tyre industry. Addressing these priorities would ensure the sustainable growth of the Indian tyre industry, and position it as a global leader in quality, technology, and sustainability. Mr. S Sunil Kumar, Country President, Henkel Adhesive Technologies India said, "The automotive sector, a vital pillar of India’s economy, stands at a transformative crossroads with the global shift towards electrification and sustainability. As new EV launches are anticipated, the demand for advanced solutions in lightweight, composite material bonding, and noise, vibration, and harshness (NVH) management is expected to increase. Incentives for R&D and the domestic production of high-performance adhesives and pumpable NVH solutions are viewed as key to enhancing EV performance, improving energy efficiency, safety, and elevating the overall consumer experience. The sustained popularity of SUVs in the Indian market further emphasizes the need for targeted budgetary measures to promote cost-effective and safety-focused solutions such as structural inserts and lightweight adhesives. Additionally, enhanced policy measures supporting sustainable materials could significantly reduce the environmental footprint of vehicle manufacturing. Combined with tax incentives for manufacturers adopting green practices, these measures are expected to drive the adoption of sustainable practices, guiding the Indian automotive sector toward a future of innovation, competitiveness, and sustainability." -