Bye Motors has sought special incentives for entry-level electric vehicles (EVs) and support for commercial electric cars under the ‘PM e-Drive’ scheme in the budget to be presented for the financial year 2026-27. Shailesh Chandra, Managing Director and CEO, Tata Motors Passenger Vehicles, said that government interventions like GST reforms, repo rate cut and changes in the tax system have revived demand in the passenger vehicle industry, but entry-level electric vehicles are still facing challenges on the sales front.
Pressure on electric vehicles increased after GSAT was reduced
Shailesh Chandra said, “I appreciate the government for giving impetus to the passenger vehicle and electric vehicle industry again. Two things can be considered in the budget. Firstly, there is a lot of pressure on entry-level electric vehicles and secondly, can the government consider giving some incentives on this? Chandra said that after the GST reforms, the prices of petrol cars have come down, which has increased the competitive pressure on entry-level electric vehicles. He said that the government took important steps like GST 2.0 and repo rate cut last year, which have increased the demand for the overall passenger vehicle industry.
The number of electric vehicles is still very less in the commercial sector.
He said EVs used in the commercial sector constitute only 7 per cent of total passenger vehicle sales, but their contribution to total passenger kilometers is around 33-35 per cent. He said that electric cars in the commercial sector were part of the FAME-2 scheme, but they have been left out of inclusion in the PM e-Drive scheme. Chandra said that a commercial car lasts 5 times longer than a normal passenger car. Therefore, support to this sector has broad positive impacts on the environment and oil imports. The government may consider including it in the PM e-drive.
Mercedes demands reduction in custom duty
Santosh Iyer, managing director and CEO of Mercedes-Benz India, said rationalizing the custom duty on imported ‘luxury’ cars will increase demand in the premium segment, which will also increase the government’s overall tax revenue. Apart from this, he said, a more stable macroeconomic policy and better fiscal management to stop the ongoing decline of the rupee will help luxury car makers. He said that these companies have been forced to increase prices due to rising costs, which has affected demand.
70 to 110 percent custom duty is imposed on imported vehicles.
Santosh Iyer said that the rates were rationalized last year under the GST reforms, which was a very positive step and now the same should happen for customs duty also. Currently, imported passenger cars priced below $40,000 attract a basic custom duty of 70 percent and vehicles priced above $40,000 attract a custom duty of 110 percent. “This custom duty can be rationalized and brought under one slab,” Iyer said.
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