Budget 2026: What to Expect for Cars, EVs and Two-Wheelers

Budget 2026: Ahead of the Union Budget 2026, India's auto industry expects measures to address slowing EV two-wheeler uptake and intensified competition from budget cars under the new tax framework. Attention is turning to how upcoming policy decisions may affect the automotive sector, including cars, electric vehicles, and two-wheelers.

The industry experts highlight the extensions of the incentive program, incentives on localisation, as the transition toward cleaner mobility continues. Additionally, new car buyers are also watching for measures that may affect ownership costs and the pace of EV adoption in the country.

When will the Union Budget 2026 be presented?

On February 1, the Finance Minister Nirmala Sitharaman is set to present the Union Budget for the 2026–27 financial year.

What was announced in the Union Budget 2025?

In the Union Budget 2025, FM Nirmala Sitharaman announced tariff exemptions for the automotive sector and reductions on basic customs duty (BCD) to enhance the manufacturing of lithium batteries for electric vehicles.

What to expect for cars, EVs and two-wheelers from the Union Budget 2026?

The key expectations of India’s auto industry from the Union Budget 2026 are:

Long-term Investment in the EV Sector

Jyoti Malhotra, Managing Director, Volvo Car India, said rationalisation of the duty structure, particularly for the rapidly growing electric vehicle (EV) segment, along with well-calibrated incentives for global automobile manufacturers investing in sustainable mobility, would serve as strong catalysts for the industry.

Piyush Arora, Managing Director & CEO, Škoda Auto Volkswagen India Pvt Ltd, said rationalising the inverted duty structure for EVs will strengthen domestic manufacturing and competitiveness and will further accelerate India’s transition to sustainable mobility.

Anurag Mehrotra, Managing Director, JSW MG Motor India, quoted that on the electric mobility front, we expect the government to further strengthen consumer-led incentives and schemes to accelerate EV adoption.

Increasing Funds for PLIs and EV Charging Infrastructure

Malhotra further highlighted that the government’s focus on the expansion of charging infrastructure in the country will act as an impetus to green mobility.

Arora said that a continued focus on building the EV ecosystem, alongside measures that support household disposable incomes, will be essential to sustain demand momentum and reinforce the sector’s role in India’s broader economic growth.

Rationalisation of Duty Structure on EVs

Arora quoted, rationalising the inverted duty structure for EVs will strengthen domestic manufacturing and competitiveness and will further accelerate India’s transition to sustainable mobility.

Mehrotra said that the rationalisation of duties on EV components would be a welcome move, along with greater support for localisation of EV manufacturing. 

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