Union Budget 2025-26: Govt exempts customs duties on EV battery materials to reduce costs

Prices of electric vehicles are likely to come down with the government fully exempting basic customs duties on materials required for making lithium-ion batteries, which industry stakeholders said, will help bring down production costs and enable development of a manufacturing ecosystem for zero-emission vehicles.

Nirmal K Minda, Chairman and Managing Director (CMD) at auto component major Uno Minda said, the government’s emphasis on manufacturing EV batteries and EV components, will significantly enhance domestic manufacturing capacities and reduce import dependence.

“Efforts to localise key EV components such as batteries, motors, and controllers will also help lower upfront costs, making EVs more accessible to consumers and strengthening India’s EV ecosystem”, Minda added.

Finance Minister Nirmala Sitharaman Saturday proposed to add to the list of exempted capital goods, 35 additional capital goods for EV battery manufacturing and 28 additional capital goods for mobile phone battery manufacturing. The measure is intended to boost domestic manufacture of lithium-ion battery, both for mobile phones and electric vehicles.

Pritesh Mahajan, Co-Founder & CEO of Revamp Moto, the FM’s proposal to fully exempt Basic Customs Duty (BCD) on cobalt powder, lithium-ion battery waste, scrap, and 12 other critical minerals is a crucial step in ensuring the availability of key raw materials for domestic manufacturing. “This will not only lower production costs but also incentivize companies to scale up operations, drive technological advancements, and create high-value job opportunities for India’s youth”, Mahajan said.

The Clean Tech Mission additionally will help improve domestic value addition and build the local ecosystem for solar PV cells, EV batteries, motors and controllers, electrolyzers, wind turbines, very high voltage transmission equipment and grid cell batteries. “By backing local production of EV batteries and solar panels, the initiative will reduce import reliance and make sustainable solutions more accessible. The government’s additional ₹10,000 crore investment signals a strong commitment to innovation and economic growth, strengthening India’s position as a global leader in clean technology”, Siddharth Patel, Founder of Greenway Mobility, said.