Updated 23 January 2026 at 12:24 IST
Budget 2026: EV Industry Seeks Structural Reforms Beyond Subsidies
As India prepares for Union Budget 2026–27, electric mobility companies are calling for a shift from pilot-led incentives to long-term structural support. Industry leaders are seeking GST rationalisation, highway charging infrastructure, affordable financing and targeted incentives to accelerate adoption across electric buses, motorcycles and domestically manufactured two-wheelers.
With electric vehicle adoption accelerating across segments, industry leaders say the Union Budget 2026–27 must focus on scaling infrastructure, addressing tax inefficiencies, and unlocking long-term capital to support India’s clean mobility transition.
Rohan Dewan, Founder of Leafy Bus, said the next phase of EV growth must extend beyond city limits and pilot programmes.
“As the Budget sets the direction for infrastructure-led growth, India’s next phase of electric mobility must move beyond pilots and focus on scale. While cities have led the EV transition so far, intercity and highway transport still account for a disproportionate share of diesel consumption and emissions.”
He added that electric buses must be treated as essential transport infrastructure rather than experimental projects.
“If electric buses are to work nationally, they need to be treated as core transport infrastructure, not experimental projects.”
Dewan highlighted the need for interoperable highway charging, rational GST structures, and long-tenure, low-cost financing aligned with EV fleet lifecycles to attract private capital and improve operator economics.
GST Inversion and Working Capital Strain
EV manufacturers have also flagged tax structure inefficiencies as a major bottleneck to domestic production. Madhumita Agrawal, Founder and CEO of Oben Electric, said the industry’s growth momentum risks slowing without GST reform.
“While 2025 was a landmark year with EV sales reaching a record 2.3 million units, anchored by 1.28 million two-wheelers, the industry’s long-term health depends on structural tax reforms.”
She pointed to the inverted GST structure as a key concern.
“While finished EVs attract a 5% GST, the raw materials sourced to build these vehicles are taxed at 18%. This 13% disparity traps vital working capital across the industry, driving up production costs and straining liquidity.”
Agrawal said aligning GST on EV components to 5% would support domestic manufacturing and make EVs more affordable for the mass market.
Electric Motorcycles Seen as Next Growth Driver
Industry leaders believe the next phase of EV adoption will be driven by electric motorcycles, a segment that remains under-penetrated despite its dominance in India’s mobility mix.
“Motorcycles dominate with nearly 70% of India’s two-wheeler landscape but remain significantly under-electrified,” Agrawal said, adding that targeted subsidies for electric motorcycles are essential to meet India’s 2030 electrification goals.
Make-in-India Focus and Charging Infrastructure
EVeium Smart Mobility Founder and CEO Sameer Moidin said Budget 2026–27 must deepen support for domestically designed and manufactured electric two-wheelers, beyond assembly-led localisation.
“The Union Budget 2026–27 must capitalize on the momentum of India’s electric two-wheeler segment, which dominated the EV market in 2025 and already serves millions of daily commuters.”
He called for incentives that promote battery localisation, affordable financing, and mass-scale manufacturing, alongside sustained investment in accessible charging infrastructure.
“This Budget has the power to turn India’s electric mobility promise into reality, making EV ownership accessible, supply chains stronger, and domestic manufacturing world-class.”
Published By : Shourya Jha
Published On: 23 January 2026 at 12:24 IST