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Budget 2025: Customs Duties For Li-Ion Battery Production Components To Be Cut - EVs To Get Cheaper?
Finance Minister Nirmala Sitharaman today announced multiple basic custom duty (BCD) exemptions as well the setting up of a National Manufacturing Mission to help support domestic manufacturing of EV batteries, motors and other electrical equipment.
These announcements came during the 2025 Union Budget speech in Parliament today, the eighth budget that Sitharaman has presented to the nation's legislative body. The announcements in the budget highlight the government's focus on enhancing the local manufacturing sector and reducing dependency on imports for critical components for the manufacturing of EVs.
Budget 2025: Customs Exemptions To Help Boost Domestic EV Battery Manufacturing
In her speech today, the Finance Minister said, "In the July 2024 Budget, I had fully exempted BCD on 25 critical minerals that are not domestically available. I had also reduced BCD of 2 other such minerals to provide a major fillip to their processing especially by MSMEs. Now, I propose to fully exempt cobalt powder and waste, the scrap of lithium-ion battery, Lead, Zinc and 12 more critical minerals. This will help secure their availability for manufacturing in India and promote more jobs for our youth"
These materials are essential requirements in the manufacturing of EV battery packs and other equipment used for renewable energy equipment. By exempting customs duties on these critical components needed for the production of lithium-ion batteries, the government is essentially lowering the cost of production of lithium-ion battery packs for manufacturers. This, in turn, is expected to make the cost of buying EVs cheaper for the customer at the showroom, if manufacturers decide to pass the benefit forward to them.
Budget 2025: National Manufacturing Mission - Furthering "Make In India" For Clean Technology
The Finance Minister also announced that the government will also be setting up a "National Manufacturing Mission covering small, medium and large industries for furthering "Make in India" by providing policy support, execution roadmaps, governance and monitoring framework for central ministries and states."
The National Manufacturing Mission stated Sitharaman will also support the manufacturing of "Clean Tech". She said, "Given our commitment to climate-friendly development, the Mission will also support Clean Tech manufacturing. This will aim to improve domestic value addition and build our ecosystem for solar PV cells, EV batteries, motors and controllers, electrolyzers, wind turbines, very high voltage transmission equipment and grid scale batteries."
The implications of these policy measures from the customs exemptions and the new National Manufacturing Mission are far-reaching and position India as a key player in the global supply chain for lithium-ion batteries and related technologies in the future.
By incentivizing domestic production, the government is not only looking to meet internal demand but also to potentially export these critical components and technologies in the future. This strategic move could not only make EVs affordable here in India but also enhance India's competitiveness on the global stage, especially in sectors that make use of sustainable energy sources.
Encouraging Sustainability and Economic Growth
The Finance Minister's announcements reflect a clear vision for India's technological and manufacturing future, emphasizing sustainability, economic growth, and technological self-reliance. The exemption of customs duties on components for the manufacturing of lithium-ion batteries for EVs, along with the establishment of the National Manufacturing Mission in the Union Budget 2025 are not only expected to reduce India's reliance on imports but also boost job creation, increase EV sales, and promote the adoption of green technologies in the country while also helping India in its journey to becoming a hub for EV manufacturing for the world.
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