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Union Budget 2025 gave electric two-wheeler makers reasons to cheer by fully exempting customs duties on materials used for making lithium-ion batteries, and by giving tax relief to people earning below Rs 12 lakhs.
While the first move will lower the production cost of electric two-wheelers and make them more affordable, the second one is expected to jack up the purchasing power of people by putting more money into their pockets.
Industry players believe these measures will likely stimulate growth and drive up demand for electric two-wheelers.
Federation Of Automobile Dealers Associations (Fada) President CS Vigneshwar said, “The rise in disposable income will allow consumers to upgrade to electric vehicles, which are increasingly seen as a viable and sustainable option.”
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The budget’s focus on rural prosperity is another key factor in driving demand for electric two-wheelers. The Dhan Dhanya Krishi Yojana, which benefits 170 million farmers, along with the expansion of Kisan Credit Card loan limits, is expected to have a positive impact on rural markets.
With improved rural income and better access to credit, demand for electric two-wheelers, particularly for last-mile deliveries in rural areas, is expected to grow. These vehicles offer an affordable and sustainable mobility solution in areas where traditional fuel-based options may be cost-prohibitive.
“The expansion of rural income through schemes like the Dhan Dhanya Krishi Yojana will drive demand for electric two-wheelers, especially in regions where these vehicles are becoming an attractive option for businesses and consumers alike,” said Vigneshwar.
Another pivotal measure in the budget is the exemption of Basic Customs Duty on critical minerals such as cobalt and lithium-ion battery waste, as well as on 35 capital goods for EV battery manufacturing.
This move is aimed at reducing the cost of manufacturing electric vehicles, including two-wheelers.
As batteries account for nearly 40 per cent of the cost of an electric vehicle, the reduction in manufacturing costs is expected to lead to lower prices for consumers, making electric two-wheelers more affordable.
Commenting on this, Ayush Lohia, Chief Executive Officer of Lohia said, “The changes in the income tax is a favourable move as this will increase the disposable income and will boost sales. Additionally, the removal of basic custom duty on lithium-ion batteries and on 35 additional goods for EV battery manufacturing will boost domestic manufacturing and backward integration which will lead the vehicle cost to come down.”
Hyder Ali Khan, CEO of Godawari Electric Motors, lauded this decision. “The customs duty exemption on essential components for EV battery production will lower production costs, making electric two-wheelers more accessible to a wider consumer base.”
The budget also placed a strong emphasis on the gig economy, a sector that plays a crucial role in last-mile deliveries using electric two-wheelers. Gig workers in the delivery sector will benefit from the introduction of identity cards and healthcare coverage under the PM Jan Arogya Yojana.
Rashi Agarwal, co-founder & Chief Business Officer of Zypp Electric, hailed these initiatives, noting that they would directly benefit companies like hers, which rely on gig workers for electric last-mile delivery services.
“The government’s support for gig workers is a game-changer,” Agarwal said.
“These measures will not only improve the livelihoods of our rider partners but also boost the adoption of electric two-wheelers for sustainable deliveries across India,” she said.
