The article was first published in The Times of India Online on January 31 2026. Please click here to read the article.
As the Union Budget 2026-27 approaches, India’s automotive industry, one of the country’s flagship sectors, stands at an inflection point. In recent years, auto OEMs and suppliers have made notable progress in exports, technology shifts, and capacity investments. Yet, at the same time, the environment has grown more volatile with global supply chains remaining unpredictable, constant changes and increases in tariffs and trade barriers, and high cost of capital. What the industry needs now is not a dramatic overhaul but a budget that signals stability, and strengthens competitiveness, to help unlock the next phase of growth.
India’s automotive sector has demonstrated strong global competitiveness, with overall exports registering 24% year on year increase. This underscores the strength of domestic manufacturing and its growing global relevance. Leading OEMs have significantly expanded capacity, positioning India as a reliable hub for emerging markets. Already the world’s third largest passenger vehicle market, a conducive Budget can help to further accelerate its progress toward becoming a global automotive manufacturing powerhouse.
While the domestic auto market has bounced back and shown a strong growth across segments, recovery in motorcycles and entry level cars continues to be slow, reflecting affordability pressures among middle- and lower-income households. The most effective demand stimulus will therefore come from measures that give more disposable income to consumers through calibrated tax relief, rationalised deductions, or lower credit costs. More than product specific subsidies, households today need confidence to make long deferred purchases. Even modest improvements in take home pay can translate into meaningful volume growth in mass segments.
Infrastructure is a major focus area where the Budget can create a multiplier effect. Over the past decade, India has made significant progress in road construction, logistics corridors, rural connectivity, and multimodal transport. These networks directly shape consumer behaviour and reduce operating costs. Sustained capital investment in transport infrastructure will generate demand over the medium term. Rural infrastructure, in particular, is central to reviving two wheeler and entry level passenger vehicle segments. Even with fiscal consolidation pressures, sharp cuts to capital expenditure must be avoided, as they would be counterproductive.
India’s EV transition has now reached a stage where policy stability matters more than new incentives. OEMs, fleet operators, and suppliers are making multi year commitments to localisation, product development, and charging ecosystems. What they need from the Budget is a clear, steady roadmap that reduces uncertainty rather than introduce new variables.
