The Union Budget 2026 has delivered a largely positive signal for India’s automotive industry, with a clear thrust on infrastructure expansion, green mobility and policy stability. While the budget stops short of offering direct, segment-specific incentives for luxury automakers, industry leaders see the announcements as supportive of long-term growth and ecosystem development.
A major takeaway for the sector is the government’s continued focus on capital expenditure, with an additional ₹1 lakh crore allocation towards infrastructure. Improved highways, stronger intercity connectivity and logistics upgrades are expected to have a multiplier effect on mobility demand across categories.
Santosh Iyer, Managing Director & CEO, Mercedes-Benz India, said the budget’s infrastructure push aligns well with the country’s evolving mobility landscape. “Budget’s strong focus on infrastructural development, with addition of ₹1 lakh crore in capex, is a step in right direction developing the country’s evolving mobility ecosystem. Better highways and improved intercity connectivity have historically driven luxury car demand in India,” he noted.
Beyond infrastructure, the budget’s emphasis on fiscal consolidation and exports also provides reassurance on the macroeconomic front. The fiscal deficit target of 4.3 per cent reflects continued prudence, which could support currency stability and improve business confidence.
“The fiscal prudence reflected in the 4.3 per cent deficit target, combined with strong focus on exports, sends a strong signal of macroeconomic stability,” Iyer added, pointing to the potential for a less volatile currency environment.
For the broader auto industry, the government’s continued focus on sustainability and green mobility remains a key positive. Investment in charging infrastructure and clean mobility solutions is expected to accelerate EV adoption and strengthen India’s transition towards low-emission transportation.
Hardeep Singh Brar, BMW India, described the budget as encouraging for the industry, particularly due to the extended customs duty ruling and the infrastructure-led approach. “The budget announcements are positive for the auto industry, with an extended customs duty ruling and increased infrastructure spending. The focus on green mobility and sustainability, including investment in charging infrastructure, is also beneficial,” he said.
However, Brar acknowledged that the luxury segment did not see targeted measures, even as the broader framework offers “macroeconomic certainty and policy predictability.”
Another notable announcement is the deferral of customs duty payments for up to 30 days, a move that could improve cash flow management for companies with import dependencies.
Overall, Union Budget 2026 reinforces long-term priorities rather than immediate stimulus, with infrastructure, sustainability and ease of doing business emerging as key pillars. For India’s auto sector, the policy direction remains consistent: building a stronger mobility ecosystem while enabling the shift towards greener and more future-ready transportation.
