Budget 2026: Auto Sector Pushes for Hybrid Incentives, EV Support and Public Transport Boost

As India moves closer to the Union Budget 2026, voices from across the automobile industry are calling for policy continuity, targeted incentives, and regulatory simplification to sustain growth and accelerate the shift towards cleaner mobility.

Leaders from dealership networks and consulting firms believe the upcoming budget presents a crucial opportunity to align economic growth with environmental responsibility, while also improving ease of doing business for auto stakeholders.

Dealership Challenges and Call for Regulatory Simplification

Compliance Hurdles in Northern India Markets

Vivek Datta, MD and CEO, Globe Toyota, JCBL Group, highlights long-standing regulatory complexities faced by dealerships, particularly in Haryana and Punjab.

According to Datta, dealerships dealing in diesel, petrol, and hybrid passenger vehicles often navigate overlapping approvals and compliance processes, which increases operational costs and slows decision-making.

Why Simplification Matters

Datta believes that streamlined regulations would:

• Improve operational efficiency for dealerships

• Encourage fresh investments in emerging technologies

• Provide confidence to expand hybrid and alternative-fuel offerings

Simplification, he argues, is essential as dealerships adapt to a multi-powertrain future rather than a single-technology transition.

Hybrid Vehicles Seen as a Practical Path to Sustainability

Why Hybrids Suit India’s Automotive Transition

Datta draws attention to the strategic relevance of hybrid vehicles in India’s mobility ecosystem, especially in a developing economy where charging infrastructure and affordability remain uneven.

He states,
"Strong support for hybrids—practical and eco-friendly for India's emerging economy—through incentives, tax rebates, and simplified regulations will boost adoption, reduce emissions, and drive sustainable growth."

Policy Expectations for Hybrids

Industry leaders argue that hybrids:

• Offer immediate emission reductions

• Do not rely entirely on charging infrastructure

• Provide a smoother transition for consumers hesitant about full EV adoption

Targeted fiscal incentives for hybrids, they believe, would expand consumer choice while supporting India’s climate commitments.

GST Stability, EV Subsidies and Infrastructure Investment

Consulting Sector Perspective on Fiscal Reforms

Subhabrata Sengupta, Partner, Avalon Consulting, notes that the major benefits of GST reforms have already been realised by the auto sector, bringing structural clarity and efficiency.

He says,
"The big boost to the GST has already happened. There is some discussion about extended PLI and EV subsidies, as well as EV infrastructure investment, with a focus on scrappage."

Focus on Fleet Modernisation and R&D

Sengupta adds that future allocations should prioritise:

• Expansion of EV charging infrastructure

• Vehicle scrappage programmes

• Technology-driven capability building

He further notes,
"Personally, I would welcome additional allocation on e-buses (fleet modernisation and electrification much needed) and incentives on R&D (where much of the Indian Auto Comp needs to move from build to print to tech ownership)."

Public Transport Electrification Gains Importance

E-Buses as a High-Impact Investment

Experts agree that increasing budgetary support for electric buses could deliver:

• Faster urban fleet modernisation

• Lower per-capita emissions

• Reduced fuel import dependence

E-bus deployment is increasingly viewed as a cost-effective way to decarbonise cities while improving public transport reliability.

Government Support Seen as Key to Global Competitiveness

Balancing Hybrids, EVs and Manufacturing Growth

Across the sector, there is consensus that balanced government support—covering hybrids, EVs, and internal combustion vehicles—will be critical during the transition phase.

Production-Linked Incentive (PLI) schemes, R&D support, and tax rationalisation are seen as tools that can:

• Strengthen domestic manufacturing

• Encourage technology ownership

• Improve India’s competitiveness in global auto supply chains

Budget 2026 and the Road Ahead for the Auto Industry

As the budget announcement approaches, auto sector leaders broadly agree on three priorities:

1. Regulatory simplification to improve ease of doing business

2. Targeted incentives for hybrids, EVs and public transport

3. Sustained infrastructure and R&D investment

If addressed effectively, these measures could help the industry navigate technological change while supporting India’s long-term sustainability and mobility goals.