Budget 2026: Tata Motors fights for incentives to keep entry-level electric cars in the race

As the Union Budget 2026 approaches, Tata Motors has urged the government to consider targeted fiscal support for entry-level electric vehicles (EVs) and extend incentives to EVs used in the fleet segment under the PM E-DRIVE programme, citing increasing pressure on affordability at the lower end of the EV market.In an interaction with PTI, Shailesh Chandra, Managing Director and CEO of Tata Motors Passenger Vehicles, said a series of policy interventions – ranging from GST reforms to repo rate cuts and changes in tax regime – have helped revive demand in the broader passenger vehicle (PV) market. However, he warned that entry-level electric vehicles continue to struggle amid changing price dynamics.

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“I would really like to appreciate the government for reviving the PV industry and the electric vehicle side. Two things that can be taken into consideration (in the budget). One, there is a lot of pressure on the entry-level segment on the EV side and whether the government would like to consider some level of incentives,” Chandra said.According to him, recent VAT reforms have reduced the prices of petrol cars, increasing competitive pressure on entry-level EVs and eroding their value proposition for cost-sensitive buyers.

Highlighting the broader impact of recent policy measures, Chandra added: “The government took significant steps last year. The big one has been the GST 2.0, but apart from that there have been reductions in repo rates, changes in the tax regime and the like. So I think the government has made a significant intervention to stimulate demand for the overall PV industry.”

Chandra also drew attention to the fleet segment and underlined its outsized contribution to mobility despite its relatively small share in vehicle sales. Electric cars used by fleets account for only about 7 percent of total PV volumes, but generate nearly 33 to 35 percent of passenger miles, he said.Also read: How Budget 2026 can help India strike the right trade policy balance for a world in flux

He pointed out that while fleet electric vehicles were supported under the earlier FAME-II program, they have not been included in the PM E-DRIVE program so far. “A fleet travels five times more than a passenger car. Therefore, the support you give to the segment has a multiplier effect at an environmental level, both in terms of particulate matter or zero emissions and in terms of oil imports. This is a segment that was identified in the FAME programme, the government could consider including PM E-Drive,” Chandra noted.

On pricing, Chandra said Tata Motors is grappling with cost pressures due to currency volatility and higher commodity prices, which together have impacted sales by about 2 percent. The company has absorbed these costs so far, but may be forced to pass some of the burden on to consumers.

“We have been able to implement certain levels of cost reduction, but in the coming days we will decide when and by how much to increase the price. This will be announced in the coming days,” he said.

Several automakers have already announced price hikes in recent weeks, citing similar challenges related to currency fluctuations and rising input costs.