Union Budget 2026: Converting India’s EV Surge into Manufacturing Power

This article is authored by Dr. Uday Narang, Founder & Chairman, Omega Seiki Mobility.India’s electric vehicle (EV) transition has clearly moved beyond experimentation and entered a phase of execution. What started as a policy push to reduce emissions and oil imports is today becoming a strategic industrial opportunity. EV adoption is no longer niche. In the last year alone, India sold well over two million electric vehicles across segments, and EVs now account for a meaningful share of new registrations in urban two-wheeler and three-wheeler markets. Electric buses are operating at scale in multiple cities, and fleet electrification is becoming commercially viable.As we approach the Union Budget, however, the question is no longer how many EVs India sells, but how strongly India can manufacture, finance, and globalise its electric mobility ecosystem. Budget 2026 must shift the EV sector from policy-led growth to industrial leadership.The first and most visible enabler of adoption is charging infrastructure. Confidence in EVs is built on the availability and affordability of charging. Today, while EV vehicles attract 5 per cent GST, charging and battery swapping services including other Key Components in an EV are taxed at 18 per cent. This inverted structure increases running costs and weakens the very economics that make EVs attractive. Charging is not an add-on service; it is the fuel of electric mobility. Rationalising GST on charging and swapping closer to vehicle GST levels would immediately reduce cost per kilometre, improve fleet utilisation and encourage private investment in charging networks.Beyond taxation, the Budget must also support deployment. Capital support for public and highway chargers, accelerated depreciation for commercial installations, and faster approvals for residential, workplace and fleet charging points will determine how quickly infrastructure scales. At the same time, charging is not just about hardware. It requires upgrades in transformers, substations, metering and load management. A fast EV ecosystem ultimately depends on a smart and resilient power grid.Manufacturing depth is the next strategic priority. India has moved beyond assembling imported kits, but global competitiveness depends on technology ownership. Key components such as battery cells, motors, power electronics, chargers and vehicle control systems still attract relatively high taxes and duties, locking up capital that should instead be invested in localisation and R&D. Budget policy must incentivise technology creation, not just production.Battery cells remain the most important structural gap. While pack assembly is now largely localised, cell imports continue to dominate, exposing OEMs to currency risk and supply volatility. The PLI programme for advanced battery manufacturing is directionally correct, but it must remain aligned with vehicle demand, scalable chemistries and commercial viability. The Budget should also push investments in recycling, second-life applications, materials processing and alternatives such as magnetless motors to reduce dependence on rare-earth imports. Indigenisation is not about where parts are assembled; it is about where intellectual property and system design reside.From an operator’s perspective, financing is the single biggest bottleneck slowing EV adoption. Across B2B and B2C segments, EV buyers face higher interest rates, conservative resale assumptions and limited lender participation. Large OEMs with captive finance arms manage better, but fleet operators, MSMEs and first-time buyers struggle to access affordable capital. Adoption does not fail because customers are unwilling; it fails because financing structures lag behind technology.Budget 2026 can unlock scale through credit-guarantee mechanisms for EV loans, interest subvention for commercial vehicles and stronger participation by PSU banks and NBFCs. Special focus on financing electric two-wheelers, three-wheelers and small commercial vehicles will generate faster returns because these segments drive daily utilisation, employment and urban decarbonisation.Policy continuity is equally important. Schemes such as PM eDrive have helped create momentum, but fragmented or short-term incentives delay industrial decisions. Manufacturers invest in plants, tooling and supplier ecosystems over many years, not Budget cycles. What the EV ecosystem needs most is predictability that allows capital, capability and confidence to compound. Incentives should evolve from volume chasing toward encouraging safety, quality, localisation and export competitiveness. Stability builds confidence, and confidence builds factories.Research and development must sit at the heart of this transition. EVs are technology products where performance, safety and cost are determined long before vehicles reach customers. India must innovate for its own operating realities — high temperatures, varied road quality and demanding usage cycles — rather than importing global templates. Budget support should accelerate indigenous R&D in battery management systems, power electronics, software-defined vehicles, onboard charging and thermal systems. Strengthening industry–academia collaboration through shared testing infrastructure and co-development platforms will reduce dependence on imported IP.The opportunity also extends beyond the domestic market. Demand for affordable EVs is rising across Africa, Southeast Asia and Latin America. India’s cost structure, engineering talent and manufacturing scale give it a natural advantage to serve these markets. With the right Budget support through export incentives, trade efficiency and quality-linked manufacturing, Indian OEMs can move from serving local demand to becoming global suppliers of electric mobility solutions.India stands at a defining moment in its electric mobility journey. Demand is real, capability is emerging and policy intent is visible. What will determine success now is consistency of execution. If Budget 2026 treats charging as national infrastructure, deepens indigenisation, fixes the financing bottleneck, supports indigenous R&D and provides stable policy frameworks, EV manufacturing can become a pillar of India’s industrial transformation.This is not simply about replacing engines with batteries. It is about building technology ownership, resilient supply chains and globally competitive manufacturing depth. Done right, electric mobility can upgrade India’s manufacturing base, strengthen domestic suppliers, create high-quality jobs and position the country as a credible alternative in global value chains. The opportunity is to leapfrog, not imitate — to innovate for Indian conditions while building at global scale. The choices made in this Budget will decide whether India becomes merely a large EV market, or a true global leader in the electric mobility era.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.