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Published 14:12 IST, February 1st 2025

Budget 2025: What Is In It For EVs?

Industry observers reckon that this step will enable companies to import machines and tools required for battery production without incurring extra taxes.

Reported by: Avishek Banerjee
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Budget announcements on Auto Sector
Union Budget for the Auto Industry | Image: Budget announcements on Auto Sector

In a significant move to support the growing electric vehicle (EV) sector in India, Finance Minister, in the 2025 Budget , announced an exemption on capital goods for lithium-ion battery production. This exemption aims to reduce the cost of setting up production facilities for lithium-ion batteries, making it more affordable for manufacturers to invest in the necessary equipment.

Speaking during her 8th budget speech, Nirmala Sitharaman said, “To the list of exempted capital goods, I propose to add 35 additional capital goods for EV battery manufacturing and 28 additional capital goods for mobile phone battery manufacturing. This will boost the domestic manufacture of lithium-ion batteries both for mobile phones and for electric vehicles.”

Industry observers reckon that this step will enable companies to import machines and tools required for battery production without incurring extra taxes. The goal is to encourage domestic production of batteries, which are a critical component of EVs and renewable energy storage solutions, thus promoting self-reliance in the sector and reducing dependence on imports, as per analysts. 

According to Shradha Suri Marwah, President, Automotive Component Manufacturers Association of India (ACMA), the Union Budget 2025-26 is forward-looking and growth-centric, reinforcing the government’s commitment to strengthening India’s manufacturing sector and driving the transition to cleaner mobility solutions. "The focus on MSMEs, innovation, exports and supply chain resilience will provide a strong impetus to the auto component industry," she noted. 
The FM also announced that it has removed the Basic Customs Duty (BCD) on essential materials like cobalt, lithium-ion battery scrap, lead, zinc, and 12 other critical minerals. 

According to Uday Narang, Founder and Chairman of Omega Seiki Pvt. Ltd., remarked, "These materials are essential for the production of lithium batteries, which are the backbone of the electric vehicle and clean energy industries. By eliminating these duties, the government is not only reducing the cost of production for manufacturers but also accelerating the transition towards more affordable and sustainable technologies."

Furthermore, Sitharaman also announced a National Manufacturing Mission (NMM) to support domestic manufacturing of solar PV cells, EV batteries, motors and controllers, electrolysers, wind turbines, high-voltage transmission equipment, and grid-scale batteries.

“To further the Make in India policy, our government will set up a National Manufacturing Mission covering small, medium, and large industries. This mission will provide policy support, execution roadmaps, and a governance and monitoring framework for central ministries and states.” Sitharaman further added.

Shailesh Chandra, President, Society of Indian Automobile Manufacturers (SIAM) is of the view that this budget is focused on long term sustained economic growth. He stated, “As the Auto Industry transits into cleaner powertrains, in line with the PM’s vision on sustainable mobility, it will specifically benefit from the National Manufacturing Mission, which supports clean tech manufacturing for batteries, motors and controllers. Furthermore, the exemption of critical minerals (e.g. Cobalt, Lead, Zinc etc.), scraps of Lithium-ion battery, and 35 additional capital goods from customs duty, will help create a strong EV ecosystem in the country.”

Updated 18:39 IST, February 1st 2025