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The Union Budget 2026–27 has drawn strong reactions from leaders in India’s electric two-wheeler ecosystem. The key themes include localisation, rare earth security, semiconductor manufacturing, and MSME support. Industry executives see the budget as a decisive step toward strengthening domestic EV supply chains. Here’s what key leaders from the electric two-wheeler industry had to say.
“The Union Budget 2026 signals a strong push towards localisation and strategic self-reliance in manufacturing. The proposal to establish rare earth corridors across Odisha, Kerala, Andhra Pradesh, and Tamil Nadu addresses a critical vulnerability in India’s industrial supply chains. Recent global disruptions, including China’s rare earth export restrictions, have demonstrated how quickly the EV ecosystem can be impacted when dependencies run deep.
Measures such as customs duty exemptions on inputs and capital goods for lithium-ion battery manufacturing further strengthen the case for building domestic EV supply chains at scale. For the electric mobility sector, this is a timely intervention. At Simple Energy, the commercialisation of our heavy rare earth-free motors reflects a clear shift towards homegrown technology and deep indigenisation. Today, we have achieved nearly 95 per cent localisation across our manufacturing and supply chain operations, built to withstand global supply shocks. Continued policy support for domestic mining, processing, and manufacturing will be critical to strengthening value chains and positioning India as a serious EV manufacturing powerhouse.”
“India’s electric two-wheeler segment has gained strong momentum, and the Union Budget 2026–27 takes a step toward scaling it into a full industrial ecosystem. Focusing on rare earth magnets and dedicated corridors in mineral-rich states is crucial to secure the materials that power electric drivetrains. Reducing customs duty on capital goods for lithium-ion batteries will help lower costs and support local manufacturing. India Semiconductor Mission 2.0 and the enhanced Electronics Component Manufacturing Scheme will strengthen supply chains, promote full-stack Indian IP, and accelerate battery and component localisation. This is pleasing to see how the government focuses on MSMEs—through credit guarantee support of Rs 10,000-crore SME Growth Fund, it will further empower companies like ours to expand capacity, innovate faster, and compete globally. For Zelio, these measures provide a clear and stable pathway to scale Make in India electric two-wheelers that are affordable, reliable, and designed for mass adoption across Tier II, Tier III, and emerging markets. As the ecosystem matures, further momentum can be unlocked through targeted PLI support for battery cells and motor controllers, along with rationalisation of GST on electric two-wheelers to enhance affordability and widen consumer access."
"Electric two-wheelers today need far more semiconductor and electronic content than ICE vehicles, but the sector is still largely dependent on imports for chips and key components. Steps like the India Semiconductor Mission 2.0 and the enhanced Rs 40,000 crore outlay for electronics component manufacturing are encouraging and move us in the right direction. The government’s focus on rare earth permanent magnets and dedicated corridors in mineral-rich states, alongside the creation of high-tech tool rooms and chemical parks, will strengthen domestic mining, processing, and component manufacturing while reducing import dependence. The reduction of basic customs duty on capital goods for lithium-ion batteries is another significant measure that can lower production costs and support local manufacturing at scale. That said, the inverted GST structure remains a real challenge, with inputs taxed higher than finished EVs. Fixing this imbalance will be critical to truly strengthen India’s EV manufacturing ecosystem and make electric two-wheelers more affordable and scalable for mass adoption."
“We laud 6 steps government’s focus on the local manufacturing ecosystem for assisting the mobility ecosystem and empowering the middle-class purchasing power. It's encouraging to see the government’s effort in promoting green mobility by incentivising local EV component manufacturing.
With more disposable income in the hands of consumers—particularly the middle class—purchasing power is set to rise, which will naturally accelerate the shift toward sustainable mobility.
With enhanced credit guarantee cover for MSMEs and startups, particularly in focus sectors crucial for Atmanirbhar Bharat, the budget lays a strong foundation for sustained growth and economic resilience.”
“The Union Budget’s focus on expanding the Rare Earth Permanent Magnet Scheme and building dedicated rare earth corridors is a positive step towards reducing import dependence for critical materials used in EV manufacturing. Rare earth magnets, which are key components in electric motors, benefit directly from this initiative, and strengthening capabilities across mining, processing and advanced manufacturing will create a more reliable domestic supply base.
The India Semiconductor Mission 2.0 and the Electronics Components Manufacturing Scheme will help build domestic capabilities in semiconductors and other electronic components, strengthening the supply chain for critical EV systems and reducing dependence on imports. As electric motorcycle manufacturing scales in India, such measures are particularly relevant for manufacturers with end-to-end, in-house development and manufacturing capabilities, supporting localisation and long-term supply stability.”
Before you go, don’t forget to check out the Hero Two-Wheeler Sales Report January 2026.
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