Union Budget 2026: 5 Key Expectations from Indian Auto Industry

Published: Thursday, January 29, 2026, 11:14 [IST]

The Indian automotive industry has outlined several key expectations ahead of the Union Budget 2026. These include long-term policy clarity, EV infrastructure development, tax rationalisation, supply-chain support, and incentives for future-ready investments. Here are the five key expectations from the auto industry.

1. Policy Clarity and Continuity

The auto industry is seeking clear and predictable long-term policies, while also urging the government to continue with the previously announced structure rather than introducing frequent changes.

Stable policy is critical for automakers as development cycles typically span several years. The policy continuity will encourage new foreign direct investment (FDI) and help manufacturers plan for expansion, localization, and technology investments with greater confidence.

2. GST and Tax Benefits

Manufacturers are requesting supportive tax structures for hybrid and electric vehicles, which could help narrow the price gap with conventional internal combustion engine (ICE) vehicles. In the two-wheeler segment, companies such as Royal Enfield and Bajaj Auto have previously highlighted the need for a more uniform tax system, particularly for smaller-capacity motorcycles, to meet mass-market demand.

3. EV Infrastructure and Adoption Support

Electric vehicle manufacturers are calling for a stronger push towards EV infrastructure, including the faster expansion of public charging networks and continued capital support. While EV adoption in India is growing at a steady pace, the industry believes it still falls short of its full market potential.

Improved charging availability, along with targeted tax benefits and potential financing or EMI-linked incentives, could further encourage consumers to transition towards electric mobility.

4. Manufacturing and Supply-Chain Support

Over the past few years, supply-chain disruptions and demand fluctuations have created significant challenges for automakers. To address this, the industry is seeking greater government support for supplier development, increased localisation, and targeted incentives to strengthen domestic manufacturing. Reducing tariffs on key components could further help stabilise supply chains, improve affordability, and reduce dependence on imports.

5. R&D and Labour Skilling Incentives

Automotive companies continue to invest heavily in research and development, as well as workforce skilling, to prepare for future technologies such as EVs, software-defined vehicles, and advanced manufacturing.

The industry is seeking more tax incentives and policy support for R&D spending and labour programmes, which could generate employment, strengthen innovation, and ensure long-term stability of India's automotive ecosystem.