On February 20, 2025, Gujarat Finance Minister Kanubhai Desai presented the state’s Budget for the fiscal year 2025-26, unveiling a comprehensive plan with a total outlay of ₹3.70 lakh crore. Among the standout announcements was a significant push towards sustainable transportation, headlined by a drastic reduction in motor vehicle tax on electric vehicles (EVs). This move aligns with the state’s commitment to environmental conservation and Prime Minister Narendra Modi’s vision of “Green Growth,” marking a pivotal moment for Gujarat’s EV ecosystem.
EV Tax Slashed to 1%: A Game-Changer for Buyers
In a major relief for EV enthusiasts and prospective buyers, the Gujarat government has slashed the motor vehicle tax on fully battery-operated electric vehicles from 6% to an effective rate of just 1%. This reduction comes in the form of a 5% rebate, making EVs more affordable and accessible to the masses. Desai emphasized that this “people-oriented and environment-friendly decision” aims to accelerate the adoption of clean energy vehicles across the state, fostering a greener future.
For consumers, this translates into tangible savings. For instance, electric two-wheelers could see a price drop of approximately ₹3,000 to ₹4,000, while four-wheelers could become cheaper by as much as ₹50,000, according to Pranav Shah, Chairman of the Federation of Automobile Dealers’ Association (Gujarat). This cost reduction is expected to boost demand, encouraging more residents to switch from conventional fossil fuel-powered vehicles to electric alternatives.
Strengthening the EV Ecosystem
The budget doesn’t stop at tax rebates. To further bolster the EV infrastructure, the Gujarat government has allocated ₹50 crore for the development of charging stations across the state. This investment addresses one of the key barriers to EV adoption—range anxiety—by ensuring that drivers have access to a robust network of charging facilities. With this dual approach of affordability and infrastructure, Gujarat is positioning itself as a leader in India’s electric mobility revolution.
A Broader Vision for Sustainability and Innovation
The EV tax cut is just one facet of a budget that reflects Gujarat’s ambition to blend sustainability with economic growth. The ₹3,70,250.35 crore outlay, an 11.36% increase from the previous fiscal year, also includes initiatives to establish Gujarat as an AI hub. Plans include setting up AI labs at Ahmedabad’s LD Engineering College and six other technical institutions, alongside expanding state-backed startup incubators like i-Hub and i-Create to four regions of the state. These efforts aim to equip Gujarat’s youth with cutting-edge skills and foster innovation in emerging technologies, including those that could further enhance EV development.
Additionally, the budget projects a surplus of ₹1,007 crore, showcasing fiscal discipline without introducing new taxes. Alongside the EV push, tax relief worth ₹148 crore has been offered through reduced stamp duty on mortgage deeds, providing further financial relief to citizens.
Industry and Environmental Impact
The decision to lower EV taxes has been met with optimism from industry stakeholders. Experts predict a surge in EV sales, particularly in the two-wheeler and four-wheeler segments, which dominate Gujarat’s automotive market. This aligns with national goals to reduce carbon emissions and combat climate change, as transportation remains a significant contributor to air pollution. By incentivizing electric mobility, Gujarat is taking a proactive step towards cleaner air and a reduced carbon footprint.
Moreover, the ₹50 crore investment in charging infrastructure signals a long-term commitment to making EVs a practical choice for everyday use. As charging stations proliferate, the convenience of owning an EV will increase, potentially sparking a ripple effect in neighboring states.
Gujarat’s Roadmap to a Greener Future
Presented in the presence of Chief Minister Bhupendra Patel, the 2025-26 budget underscores Gujarat’s dedication to sustainable development. The EV tax reduction and infrastructure funding are not standalone measures but part of a broader strategy to realize “Viksit Gujarat 2047”—a roadmap aligned with the national vision of a developed India by 2047. By prioritizing green growth, the state is setting an example for others to follow, blending economic progress with environmental stewardship.
As Gujarat accelerates its transition to electric mobility, the budget’s EV-friendly policies could serve as a catalyst for change, inspiring both consumers and manufacturers to embrace a cleaner, more sustainable future. With affordability enhanced and infrastructure on the rise, the state is well on its way to becoming a hub for electric vehicles—and a model for green growth in India.