Union Budget 2026-27 Receives Positive Response from Automotive Sector
Finance Minister Nirmala Sitharaman presented the Union Budget for the fiscal year 2026-27 today, outlining a comprehensive economic roadmap with significant implications for various industries. The budget places strong emphasis on higher capital expenditure, infrastructure creation, manufacturing-led growth, and long-term policy stability, setting the tone for India's economic trajectory in the coming year.
Capital Expenditure and Infrastructure Development
The government has set an ambitious capital expenditure target of Rs 12.2 lakh crore for FY 2026-27, marking a substantial commitment to infrastructure development. This allocation includes an additional Rs 1 lakh crore specifically earmarked for enhancing the country's mobility ecosystem through better highways and improved intercity connectivity.
Industry leaders have welcomed this infrastructure push, noting its potential to stimulate demand across sectors, particularly in the automotive industry. The budget's focus on fiscal discipline is reflected in the 4.3% fiscal deficit target, which combined with strong export orientation, sends a positive signal about macroeconomic stability.
Automotive Industry Perspectives
Santosh Iyer, Managing Director and CEO of Mercedes-Benz India, emphasized how improved infrastructure historically drives luxury car demand in India. He stated that the budget's strong focus on infrastructural development represents "a step in the right direction" for developing the country's evolving mobility ecosystem.
Shailesh Chandra, President of SIAM and Managing Director of Tata Motors Passenger Vehicles Ltd, described the budget as a continuation of the government's long-term growth agenda. He highlighted that the increased capital expenditure would stimulate industrial activity and demand across sectors, including automobiles.
Chandra also welcomed several specific initiatives:
- Electronic components manufacturing support
- Rare-earth processing corridors development
- Container manufacturing initiatives
- Allocation of 4,000 e-buses for Purvodaya States
Support for Advanced Manufacturing and Electronics
The budget includes significant measures to strengthen domestic value chains in advanced manufacturing sectors. Ravi Mehra, Managing Director of Uno Minda, highlighted several key initiatives:
- Rs 40,000 crore outlay under the Electronics Components Manufacturing Scheme
- Launch of India Semiconductor Mission 2.0
- Development of rare-earth corridors
- Ease-of-doing-business reforms
These measures are expected to enhance investor confidence and strengthen domestic manufacturing capabilities across critical sectors.
Electric Vehicle and Sustainable Mobility Focus
Several industry leaders specifically addressed the budget's implications for electric vehicles and sustainable mobility. Dr. Uday Narang, Founder and Chairman of Omega Seiki Mobility, noted that the focus on ease of doing business and MSME financing would lower cost barriers and improve supply chain resilience, creating favorable conditions for EV companies to scale innovation and expand adoption.
Aravind Mani, CEO and Co-Founder of River Mobility, highlighted the importance of access to critical minerals and domestic processing. He welcomed proposals to develop rare-earth corridors and cluster-based chemical parks, noting that stronger domestic chemical manufacturing would directly support batteries, components, and advanced materials.
Ayush Lohia, CEO of YOUDHA, emphasized how the continuation of customs duty exemptions on capital goods and lithium-ion cell components, along with incentives for critical mineral processing, would significantly reduce manufacturing costs and strengthen domestic value chains.
Integrated Mobility Ecosystem Vision
Vaibhav Kaushik, co-founder and CEO of Nawgati, provided insights on the broader mobility ecosystem. He noted that viewing fuel and charging access as an integrated national network aligns well with the budget's emphasis on sustainable and efficient infrastructure.
Kaushik emphasized that the next phase would depend on execution clarity, common standards, and interoperable data systems that enable real-time visibility. He stated that if implemented effectively, these measures could:
- Reduce congestion and downtime
- Optimize fleet operations
- Ensure existing infrastructure delivers stronger economic and environmental outcomes
Economic Momentum and Global Competitiveness
Jyoti Malhotra, Managing Director of Volvo Car India, noted that the budget's focus on sustaining economic momentum would help the mobility sector navigate global uncertainties. He highlighted that measures aimed at maintaining growth would support consumption, particularly in higher-value segments.
Malhotra stated that "the continued focus on maintaining and improving the current growth rate in the Union Budget 2026-27 should help the economy to enhance productivity and competitiveness" by building resilience to a volatile global economy. He added that simpler taxation and customs processes would further support an upward economic trajectory.
The Union Budget 2026-27 has been broadly welcomed by automotive industry leaders who see it as a comprehensive framework supporting infrastructure development, manufacturing growth, and sustainable mobility transition. The emphasis on capital expenditure, combined with specific measures supporting advanced manufacturing and electronics, creates a favorable environment for the sector's continued growth and evolution.
