India's fiscal challenges have come under scrutiny as the fiscal deficit for the fiscal year has widened significantly. Reports indicate the deficit is at 55% compared to the same period last year. With total receipts reported at 23.18 lakh crore rupees and overall expenditure at 32.32 lakh crore rupees for the period of April to December, the figures represent 72.3% and 67% of the current fiscal year's budget target, respectively.
On February 1, Finance Minister Nirmala Sitharaman is set to present the Union Budget 2025, and there’s heightened anticipation within the Indian auto industry for substantial policy changes, tax reforms, and increased infrastructure investments. These adjustments are viewed as imperative to accelerate the transition toward cleaner and more sustainable transportation options.
Vaibhav Kaushik, Co-founder & CEO of Nawgati, stresses the urgent need for bold measures. He remarked, "By allocating funds from the upcoming budget in building technology-led systems, we can monitor non-compliant vehicles, discourage the use of outdated vehicles, and reduce congestion on roads created due to vehicle checking." This perspective is echoed across the industry as stakeholders push for comprehensive reforms.
Nilesh Bajaj, CEO & Co-founder of Vayve Mobility, elaborates on some of the most pressing issues, particularly the existing tax structure. "A key priority should be reforming the GST framework for electric vehicle components. The current system, where components such as lithium-ion batteries face higher tax rates than finished EVs, creates strain on manufacturer cash flows," he stated. His call for adjustments aims to dismantle the inverted duty structure hampering growth.
Chandrasekar Krishnamurthy, Global Engineering Director at BorgWarner, underlined the need for consistent policy support for electrification across the board. Key expectations include establishment of uniform 5% GST rates for EVs, batteries, and charging services, along with subsidies to bolster domestic battery manufacturing and funding for charging infrastructure. Such measures are anticipated to strengthen the local supply chain and lessen dependence on imports.
Nikhil Agarwal, President of CJ Darcl Logistics, is also advocating for policies promoting sustainability within logistics. He highlighted the integration of electric vehicles with commercial fleets and proposed incentivizing the adoption of alternative fuels and renewable energy. Agarwal noted, "We expect the implementation of advanced policies endorsing green technologies and promoting the integration of electric vehicles within the commercial fleet."
Maxson Lewis, Founder & CEO of Magenta Mobility, called Budget 2025 pivotal for the EV logistics sector. He emphasized the role of structured policies to drive EV adoption, including incentives for fleet electrification and reduced financing costs for logistics operators, which would bolster India's move toward sustainable transport solutions.
Meanwhile, Ayush Lohia, CEO of Lohia Auto, stressed the importance of boosting domestic battery production capabilities. He insisted on favorable policies to attract investments, saying, "Favourable policies to attract investments in battery production facilities are necessary." By advocating for the easing of tax discrepancies, he also urged classification of charging stations as part of the infrastructure industry to improve financially viable options.
Suyash Gupta, Director General of the Indian Auto LPG Coalition, broadened the conversation to the auto LPG sector, stressing the need for recognition of its potential as a sustainable fuel alternative. He posited, "Reducing the GST on Auto LPG from the current 18% to 5% will level the playing field and make it more competitively priced, fostering greater adoption." This assertion highlights the intersection of energy security and environmental health as India navigates its fiscal future.
Adding another layer of complexity to the Budget discussions is the Economic Survey's suggestion to impose higher GST and stricter labeling norms on ultra-processed foods. It pointed out the necessity of combating misleading nutrition claims on these products.
With these demands and proposals rolling forward, Budget 2025 stands at the brink of not just shaping the automotive industry's future but the broader economic fabric of India. The decisions made will not only address immediate fiscal concerns but also set the groundwork for sustainable growth moving forward.