Union Budget 2026: EV And Renewable Industries Call For Infrastructure, Finance Support
According to a recent Niti Aayog report, India has set a target of 30 per cent EV penetration by 2030.
Published : January 25, 2026 at 2:24 PM IST
By Gautam Debroy
New Delhi: With Finance Minister Nirmala Sitaraman set to present the Union Budget for 2026-27 on February 1, experts from India’s electric vehicle (EV) industry and renewable energy sector have expressed optimism that it will have a clear road map for these two vital components.
“From the EV industry’s perspective, this Budget is an opportunity to move from momentum to maturity. The sector has proven that demand exists, especially in the commercial and last-mile mobility segments. What we now need is policy depth that supports long-term manufacturing, stable supply chains and affordable financing,” said Ayush Lohia, CEO of YOUDHA, a pan-India-based electric vehicle manufacturing company, to ETV Bharat in New Delhi.
Significantly, India has set up a national mission on transformative mobility and battery storage to drive the adoption of electric vehicles in the country. According to a recent Niti Aayog report, India has set a target of 30 per cent EV penetration by 2030. “By the end of 2024, it had reached a penetration level of only about 7.6 per cent. Clearly, a stronger push is necessary to take it to 30 per cent by 2030,” the report said.
Recognising the need to accelerate this journey, Niti Aayog undertook extensive stakeholder consultations to identify barriers and discovered high-impact enablers for scaling EV adoption by engaging with original equipment manufacturers, think tanks, industry associations and state governments. The process surfaced critical insights into the challenges constraining EV growth and the pathways to unlock its full potential.
Highlighting the importance of accessing green finance, Lohia said that affordable credit lines and financing programs for EV buyers and fleet operators can play a decisive role in widening adoption, particularly among small entrepreneurs and driver-owners.
When asked about the need for a robust charging infrastructure and enhanced consumer incentives for EV adoption, Lohia said that infrastructure and incentives are two sides of the same coin.
“Consumer confidence in EVs does not come only from price support — it comes from the assurance that the vehicle can be charged easily, reliably and close to where it is actually used. For commercial EVs, especially in the three-wheeler segment, the real need is charging at work locations rather than just highways or city centres,” he said.
On the incentives side, according to Lohia, a well-calibrated approach that supports first-time EV buyers, small fleet operators and shared mobility providers can accelerate adoption without distorting the market. The goal should be to make EVs a practical economic choice, not just a subsidised one.
Talking to ETV Bharat, OP Agarwal, Distinguished Fellow, Niti Aayog, said that in the last 10 years, India has done well with the number of electric vehicles sold having gone up from just 50,000 in 2016 to over two million in 2024.
“Motorised two-wheelers and three-wheelers have done particularly well, with about 1.9 million of them being sold in 2024. India is 2nd only to China in this segment. There has been some progress in electric buses and electric cars, but electric trucks have yet to pick up,” Agarwal said.
Lohia further said that the clean energy transition in mobility needs to be viewed as an ecosystem, not just a vehicle shift.
“A clear roadmap should align manufacturing, infrastructure, finance and trade policy under a single long-term vision. This means building strong domestic capabilities in batteries and components, creating a nationwide charging network that supports both urban and semi-urban usage, and ensuring that financing mechanisms allow broad participation in the EV economy. At the same time, encouraging global collaborations through pragmatic trade policies can bring in advanced technologies and strengthen India’s role in global supply chains,” he said.
Lohia said that a stable and predictable policy framework can ensure that India’s transition to clean energy in transport is not only fast, but inclusive, resilient and capable of supporting livelihoods at scale.
In the 2025-26 Union Budget, the central government had taken major steps towards the manufacturing of electric vehicles, batteries for the EVs and the import of critical minerals from other countries and their recycling, which would further aid the EV and battery manufacturing industry.
Finance Minister Nirmala Sitaraman, in the 2025-26 budget, had allocated Rs 410 crore for the National Critical Mineral Mission. The budget allocation for the production-linked incentive (PLI) Scheme for the National Programme on Advanced Chemistry Cell (ACC) Battery Storage was also increased from Rs 15.42 crore to Rs 155.76 crore.
Meanwhile, captains of industry from India’s renewable energy sector said that the budget must lay the foundation for a circular energy economy.
“As we look to Union Budget 2026, the renewable energy sector expects a clear policy signal that shifts the focus from scale to long-term sustainability and global competitiveness. Strengthening fiscal incentives through enhanced production-linked support, viability gap funding, accelerated depreciation, and a simplified tax framework will be critical to sustaining investment momentum across renewable technologies,” said Dr Chetan Shah, Chairman and Managing Director, Solex Energy Limited.
Stating that the budget must also lay the foundation for a circular energy economy, Shah said, “Incentivising recycling and responsible end-of-life management of solar modules, batteries, and storage systems will be essential for building a resilient and environmentally responsible energy ecosystem.”
Equally important is sustained investment in research, innovation, and skill development, Shah said.
“Targeted support for R & D, industry-academia collaboration, and clean energy innovation hubs can accelerate indigenous technology development, while structured workforce upskilling will ensure India remains future-ready,” he stated.
A Niti Aayog report named “Renewables Integration in India” highlighted several challenges for this sector, including limited inter-state transmission lines due to concentration of solar wind energy sites in certain regions of states or certain states, increasing peak demand from new demand sources (such as air conditioners and electric vehicles), and increasing fluctuations in frequency and voltage levels at the regional level.
“As India’s renewable energy transition gathers momentum, the Union Budget can play a crucial role in accelerating deployment across the solar and wind sectors through focused policy support. Continued government support for solar and EPC-led infrastructure projects will be key to sustaining capacity addition and strengthening execution capabilities on the ground,” said Srinivas Suthram, Senior Vice President of Kshema Power India.
He said that clear and consistent policies supporting the land availability for large wind farms and grid connectivity for wind turbine installations can help revive momentum in the wind sector and encourage long-term investments.
“Additionally, a calibrated rationalisation of import duties on critical renewable components, particularly those sourced from China and other major items for the creation of the sub-stations for power evacuation for these wind farms, like circuit breakers, isolators etc., would help reduce project costs and address supply-chain constraints while domestic manufacturing continues to scale. Such balanced measures can enhance project viability, improve timelines, and reinforce investor confidence in India’s clean energy ecosystem,” he said.
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