Union Budget 2025: Key Updates For Commercial Vehicle Industry
Modified On Feb 03, 2025 05:18 PM
Many commercial vehicle manufacturers applauded the latest union budget 2025 for the industry which announced the National Manufacturing Mission, PLI Auto Scheme, and more.
Key Highlights
- According to Ashok Leyland official, Union Budget 2025 reinforces its commitment to clean energy vehicles, contributing to a greener, cleaner future as part of the national mission to achieve net-zero carbon emissions.
- Anish Shah, Mahindra Group CEO, stated, “The theme of inclusive development, with a strong emphasis on MSMEs, agriculture, and skilling, aims to create a resilient ecosystem that will drive economic growth and help achieve the Viksit Bharat Goals by 2047.”
- As per EKA Mobility official, the Finance Minister’s initiatives, including the National Manufacturing Mission and strategic exemptions on critical minerals for EV battery production, are crucial steps toward strengthening the cleantech ecosystem.
With a solid budgetary outlay for capital expenditures of Rs 11.2 lakh crore in FY2026 compared to Rs 10.2 lakh crore in FY2025, the Union Budget 2025 announced on February 1, implied a growth of 10.1% YoY. Given that India's economic growth and development depend heavily on infrastructure investment, the development seems significant.
An economy’s infrastructure, which includes roads, highways, railroads, airports, ports, and urban development, serves as its backbone by boosting industrial activity, improving connectivity, and reducing logistics costs. It also drives the demand for automobiles, including commercial vehicles, construction equipment, and related products.
Related Link: Critical Mineral Mission 2024 Proposed In New Union Budget To Enhance Electric Vehicle Battery Production
Fund Allocation For PLI Auto Scheme
The PLI Auto scheme consists of 2 parts – the Champion OEM incentive program for all segments of battery electric vehicles and hydrogen fuel cell vehicles, and the Champion component incentive program for high-tech and high-value components. As per the latest union budget, the Indian government has set aside Rs 2,819 crore for the production-linked incentive (PLI) program for automobile and auto parts in the fiscal year 2026.
In the fiscal year 2025, the government had initially allocated a substantially greater sum of Rs 3,500 for the scheme. However, the revised budget estimate for the year is Rs 347 crore, reflecting the delay in the scheme's incentive payments. While incentives for other AAT products range from 8% to 13%, incentives for hydrogen fuel cell and electric vehicle components range from 13% to 18%.
Push For Electric Mobility & Domestic Manufacturing
Leaders in the Indian commercial vehicle sector have praised the Union Budget 2025–26 for its emphasis on advancing domestic manufacturing, developing clean technologies, and fortifying India’s electric vehicle ecosystem. The budget's all-encompassing strategy covers many related areas, from direct support for EV production to more economic measures that may increase demand for automobiles.
In addition to supporting local production of motors, controllers, and other essential components, the union budget included a customs duty exemption on 35 capital goods for EV battery manufacturing as part of a comprehensive Clean Tech manufacturing support package.
Also Read: Government Supports Around 3.72 Lakh Electric Vehicles Under Electric Mobility Promotion Scheme 2024
Reactions From Ashok Leyland On Budget 2025
Commenting on the budget 2025, Dheeraj Hinduja, Executive Chairman, Ashok Leyland, stated, “The Finance Minister has presented a clear, growth-driven budget that aligns with the Prime Minister’s vision of fostering a competitive and resilient India with inclusive growth by investing in people, economy and innovation. The budget prioritises extensive national infrastructure development and accelerates the digitisation of the economy. Continuous government investments in infrastructure are set to fuel sustained economic growth.”
He added, “Additionally, the government's strong commitment to green mobility is expected to create new avenues for innovation and growth across the country. The launch of the National Manufacturing Mission will support the sector by providing crucial policy backing, execution plans, and a governance and monitoring framework.”
“With strategic investments in skilling, digitisation, healthcare, education, agriculture, and electrification, the budget aims to shape India’s economic trajectory in the years ahead. Furthermore, it reinforces our commitment to clean energy vehicles, contributing to a greener, cleaner future as part of the national mission to achieve net-zero carbon emissions.”
Reactions From Mahindra On Budget 2025
Anish Shah, Group CEO and MD, Mahindra Group, stated, “We commend the 2025 Union Budget for its continued support of robust consumption growth through changes in the tax structure, effectively placing more disposable income in the hands of the Indian consumer. This will encourage private sector capex to move in a positive direction.”
“The theme of "Make in India for the world" remains a key focus in this budget, with efforts to reduce India's manufacturing costs poised to significantly enhance the country's global competitiveness. In addition to providing an immediate stimulus for demand and growth, the budget emphasises long-term growth through substantial infrastructure investments and a strong focus on innovation.”
“Lastly, the theme of inclusive development, with a strong emphasis on MSMEs, agriculture, and skilling, aims to create a resilient ecosystem that will drive economic growth and help achieve the Viksit Bharat Goals by 2047.”
Reactions From Tata Motors On Budget 2025
Similarly, Girish Wagh, Executive Director, Tata Motors, stated, “The union budget 2025 lays out a clear roadmap for long-term transformation, driving India closer to its vision of a ‘Viksit Bharat’ with progressive policies and reforms that foster modernisation, economic growth, and inclusive development. The continued allocation of over Rs. 11 lakh crore in capital expenditure, alongside targeted initiatives to boost consumption, support ‘Make in India’, and promote agricultural growth, is set to create a more dynamic economic environment.”
He continued, “The removal of basic customs duties on key materials for battery manufacturing is a strategic move to boost domestic EV production, foster a sustainable ecosystem, and drive India's transition to a greener economy. As infrastructure projects gain momentum and consumption pick up, improved roads, connectivity, and logistics will undoubtedly drive increased demand for freight and commercial transport solutions driven by both domestic demand and broader economic recovery.”
Reactions From VECV On Union Budget 2025
Speaking about the union budget for financial year 2026, Vinod Aggarwal, MD and CEO, VECV, noted, “The introduction of the National Manufacturing Mission and the emphasis on Clean Tech Manufacturing, including National Critical Minerals Mission, particularly for EV batteries, motors, controllers, and high-voltage transmission equipment, will provide a significant boost to ‘Make in India’ efforts.
“Furthermore, adjustments in GST rates, incentives for electric vehicle adoption and import duties on components will reshape the industry’s landscape. Increased allocations for infrastructure development, particularly in roads and transportation, will directly fuel demand for commercial vehicles. Additionally, budgetary provisions for working capital support, technology upgradation funds, and easier credit access will play a crucial role in strengthening the MSME ecosystem, ensuring its long-term growth and sustainability.”
Reactions From GreenCell Mobility On Budget 2025
Devndra Chawla, MD and CEO, GreenCell Mobility, stated, “We applaud the Government of India for its steadfast commitment to advancing the EV sector and fostering a sustainable future. The set-up of the National Manufacturing Mission and exemption on capital goods will accelerate domestic clean tech manufacturing, enhance EV battery production, and strengthen India’s renewable energy ecosystem. A robust EV infrastructure is crucial for industry growth and seamless integration of electric mass mobility.”
“Additionally, the government's focus on connectivity and tourism infrastructure, along with income tax relief, will boost economic activity by increasing disposable income for the middle class. These initiatives will encourage more people to explore new destinations while choosing sustainable and eco-friendly transportation options like our NueGo service. At GreenCell Mobility, we remain committed to supporting India’s sustainable development goals by driving the future of electric mass mobility and contributing to a greener, more connected nation.”
Post-Budget 2025 Reactions By DICV
Satyakam Arya, Managing Director and CEO, Daimler India Commercial Vehicles, commented, "The Union Budget 2025-26 will be a game changer for India and the mobility sector in particular, helping us become a global leader in EV manufacturing and sustainable transportation. The decision to fully exempt 35 capital goods essential for EV battery manufacturing from Basic Customs Duty (BCD), along with complete tax exemptions on critical materials such as Lithium and Cobalt, will dramatically reduce production costs and foster a more robust local supply chain."
He further added, "This emphasis on localising battery production will create technological advancements and generate more jobs. Together with the new income tax slabs, we expect higher disposable incomes and more discretionary spending power – two factors that will positively impact the overall economy. Also, with mining identified as one of the six domain areas for transformative reforms and the introduction of the State Mining Index, we see major growth potential for the sector in the coming years. The allocation under the National Critical Minerals Mission will also enhance domestic production, and technology development and create a skilled workforce. Given DICV’s strong commitment to sustainability, we particularly welcome and appreciate the Government's forward-thinking vision.”
Post-Budget 2025 Reactions By EKA Mobility
Sudhir Mehta, Founder, EKA Mobility, commented, “We commend the government's forward-thinking budget, which emphasises sustainability, innovation, and domestic industrial growth. The Union Budget 2025 announcements underline the commitment to creating an environment that fosters economic growth while addressing major issues in the clean energy and mobility sectors. The Finance Minister’s initiatives, including the National Manufacturing Mission and strategic exemptions on critical minerals for EV battery production, are crucial steps toward strengthening the cleantech ecosystem.”
He added, “Importantly, the budget exempts 12 more minerals, cobalt powder, lead, zinc, lithium-ion battery trash, and other essential inputs from Basic Customs Duty (BCD). There has also been a noticeable increase in the manufacturing of 35 new EV capital products. These programs demonstrate a strong commitment to sustainability, innovation, and greater industrial competitiveness, setting the framework for transformative progress in a variety of critical sectors.”
“The nation's energy revolution will be dependent on funding for small modular reactors and the government's target of 100 gigawatts of nuclear power by 2047. Long-term growth can be solidified by financial agreements that allow governments to expand their borrowing capacity, as well as indirect taxation initiatives targeted at increasing domestic value creation. The Budget 2025 accelerates the transition to a more sustainable and environmentally conscious future.”