Highlights of The UNION BUDGET 2023 FOR THE AUTOMOTIVE Industry

MotoGazer Union Budget 2023 Highlights for Automobile Industry
Highlights of The UNION BUDGET 2023 FOR THE AUTOMOTIVE Industry


The much awaited Amrit Kaal budget 2023 has finally been released. The Union Budget 2023 is said to be a game-changer for the automobile industry as this time. It has given life to measures that in turn will boost the sector and support growth. The Indian Union Finance Minister – Nirmala Sitharaman presented the Union Budget 2023 in the parliament on the 1st of February 2023. In line with this, we will be walking you through some of the most valued Union Budget 2023 highlights that further underlines what it holds for the ever-evolving automotive industry!

It is a fact that the Automotive sector in India struggled and stumbled to a great extent during the pandemic. However, the industry managed to come back and has ever since been high-flying. This time, the automotive sector held high expectations, hoping for a great deal of a favored budget release. While the budget succeeded in keeping up to the expectations, the automotive industry gave a big thumbs up to the Union Budget 2023.

Key budget highlights for the automobile sector include:

  • Green Energy
  • Electric Vehicles
  • The Scrappage Policy & Battery Boost
  • Custom Duty Exemption On Machinery of Li-On Batteries
  • Boost in Ethanol Blend Production
  • MoRTH
Union Budget 2023 Highlights In Detail
Green Energy

A section of the budget 2023 focuses on ‘green energy’ alongside making EVs (electric vehicles) more affordable. The government has comprehensively planned to reduce carbon emissions and work on several green energy alternatives that will also further create a number of job opportunities in the country.

The other most prominent announcement is that of the allocation of a whopping ₹35,000 Crore completely in support of the green projects and net-zero emission products. The Finance Minister also announced that ₹ 19,700 Crore has been allocated for the National Hydrogen Mission. Aiming to reach a whopping production capacity of nearly five million metric tones by the year 2030. This will now help boost the hydrogen fuel-powered mobility in the country that several big automakers have been advocating about lately. The minister also emphasized India’s stand of winning over carbon neutrality by the year 2070.

Moreover, the Union Budget 2023 announcements were made keeping the spotlight on the electric vehicles and scrappage policy.


Over the last couple of years, the government of India has played a very important role in driving the successful adoption of electric vehicles by initiating a number of favored policies to promote effective sustainability and to create an ecosystem that supports growth.

The Union Budget 2023 has removed the custom duty on capital goods and machinery.  That are required for the manufacturing of lithium-ion cells which are further used in batteries of EV’s. This will help reduce the cost of electric vehicles in the country. The budget 2023 also focuses on increasing the availability of electric vehicles and fuel-efficient options in order to reduce the carbon footprint in the country.

The Scrappage Policy and Battery Boost

The Union Budget 2023 states that the government has planned to set aside funds in order to replace its old vehicles and ambulances and will also further add to the new vehicle sales tally.

This new policy will not affect the direct buyers but would rather be quite beneficial to the car manufacturers. The vehicle scrappage policy has already been set in motion and the government has announced the benefits for it too. Moreover, the government vehicles older than 15 years will soon be scrapped for newer vehicles. Which will help reduce vehicular pollution. In addition to this, the old ambulances will be swapped in for newer ones. Which will certainly be safer and better equipped with essential amenities.

Duty Exemption On Machinery Of Li-On Batteries

The customs duties exemption is being extended for the import of goods and machinery required to manufacture lithium ion cells for EV batteries. This will help ensure and encourage more local production and manufacturing of Lithium ion batteries. Which will keep the prices of Electric Vehicles in check. The exemption was very much needed since the growing number of automobile manufacturers have been launching several electric vehicles in the country. This would also encourage them to launch more EVs at their best.

Boost in Ethanol Blend Production

The Budget 2023 has now exempted denatured ethyl alcohol from the basic customs duty. Denatured alcohol is generally ethanol that gets toxic additives and is usable for fuel alternatives. With this positive exemption, the government has planned to comprehensively support and boost the production of ethanol. The center has also made it mandatory for all the cars to be ethanol-material compliant starting from the month of April 2023.


The Union Budget 2023 extended further support with increased budgetary for the roads sector. The FM Nirmala Sitharaman allocated a capital outlay of ₹ 2.58 trillion for the Ministry of Road Transport and Highways (MoRTH). Which is 38% higher compared to previous year’s estimates. Further, the said allocation is in synchronized with what the Modi government sources had indicated earlier. Additional budgetary support is anticipated for MoRTH to meet the highway construction target of 25,000 km by the end of FY 2023-24.


The automotive industry, as a whole, has been quite ecstatic since the release of the favored Union Budget 2023. The auto industry has now termed the Union Budget 2023 as ‘growth-oriented’.

All in all, the new budget has purely turned out to be a growth-oriented one with a considerable positive impact on the evolving automotive sector.



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