As India prepares for the Union Budget 2026–27, expectations are high around policy support for clean mobility and domestic manufacturing. According to industry insights, Budget 2026: Deloitte says R&D remains central to strengthening India’s electric vehicle (EV) ecosystem, with a sharp focus on localisation, innovation, and competitiveness.
Recalibrating EV Incentives for Wider Participation
Deloitte India has highlighted the need to refine the existing Production-Linked Incentive (PLI) scheme for automobiles and advanced automotive components. While well-intentioned, the current scheme has seen limited participation due to strict eligibility norms, including nearly 50% domestic value addition requirements and high investment thresholds. To unlock broader industry participation—especially from startups and component manufacturers—Deloitte recommends easing these conditions. This recalibration could significantly expand the domestic EV supply chain and attract fresh investments.
R&D at the Core of Localisation Strategy
A key pillar of Deloitte’s pre-Budget recommendations is targeted tax incentives for research and development. Budget 2026: Deloitte says R&D remains central to accelerating the indigenisation of critical EV components such as batteries, power electronics, and rare earth magnets. Focused R&D support would help reduce reliance on imported technologies while enhancing India’s innovation capabilities and long-term global competitiveness.
Fixing the Inverted Duty Structure
Another major concern flagged is the inverted duty structure within the GST framework. While electric vehicles attract a concessional GST rate of 5%, many inputs used in EV manufacturing are taxed at higher rates. Additionally, GST refunds currently exclude capital goods and input services, adding to cost pressures. Deloitte suggests extending refund eligibility to these areas, which would ease financial strain on manufacturers and improve overall efficiency.
Making Charging More Affordable
To encourage faster EV adoption, Deloitte has proposed reducing the GST on public charging infrastructure services from 18% to 5%, aligning it with the GST rate on EVs. This move would lower charging costs for consumers and support the rapid expansion of charging networks across the country.
Strengthening India’s Sustainable Transport Goals
Speaking on the upcoming budget, Deloitte India emphasized that Budget 2026: Deloitte says R&D remains central to India’s clean mobility transition. These measures could help deepen indigenisation, reduce crude oil imports, conserve foreign exchange, and support sustainable economic growth.
With the Union Budget scheduled for presentation on February 1, 2026, Budget 2026: Deloitte says R&D remains central to shaping policies that could define the future of India’s EV and manufacturing landscape.
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