This year has been a landmark year for the automobile industry in many respects. Following the successful conclusion of the Bharat Mobility Global Expo at the beginning of 2025, the Government of India announced reforms in personal income tax in the Union Budget, which laid the foundation for a positive demand impact on the auto industry. Financial year 2024–25 closed on a strong note, with passenger vehicles and three-wheelers recording their highest ever sales, while two-wheelers registered healthy growth. The commercial vehicle segment also maintained a steady performance during 2024–25.
This strong performance was supported by a series of positive policy interventions during the year, which played a critical role in sustaining demand momentum and reinforcing consumer confidence across the automobile market.
The Reserve Bank of India’s successive repo rate cuts during the year helped ease financing costs, strengthened consumer sentiment and provided a positive demand tailwind for the industry. The conclusion of the India–UK Free Trade Agreement in July represented a significant milestone in India’s global economic engagement, particularly with developed economies, signalling the country’s growing leadership and creating new opportunities for the Indian automobile industry. The industry did witness some supply-side challenges, especially due to a shortage of rare earth magnets in the global market, but has been swift in adapting to these new challenges.
Most importantly, the rollout of GST 2.0 reforms in September, to reduce the GST rates on vehicles to 18 per cent and 40 per cent from earlier rates of 28 per cent to 31 per cent and 43 per cent to 50 per cent, respectively, brought in renewed cheer amongst consumers and injected fresh momentum into the Indian automotive sector. Improved affordability, particularly in entry-level segments, has significantly benefited first-time buyers and middle-income families, enabling broader access to personal mobility. The continuation of the concessional 5 per cent GST rate on electric vehicles (EVs) has also been helping sustain this momentum, supporting steady growth of EVs in the country across all segments.
All segments across the industry are expected to close the calendar year with growth over the previous calendar year. In addition, we expect strong double-digit growth in the export volumes across all segments, indicating growing brand acceptance of vehicles made in India.
With all these positive developments in the country’s policy environment and expectations of improved geopolitical equations, the Indian auto industry is optimistic that the year 2026 would continue to see further growth of this sector, as the country moves steadily towards its aspiration of Viksit Bharat.
(Disclaimer- The author of this article is Rajesh Menon, Director-General, SIAM. Views are personal)
