Budget 2025: In a major push to enhance India’s electric vehicle (EV) and clean energy sectors, Finance Minister Nirmala Sitharaman announced significant tax exemptions aimed at promoting the production of lithium batteries and related technologies. The government has removed the Basic Customs Duty (BCD) on essential materials such as cobalt, lithium-ion battery scrap, lead, zinc, and 12 other critical minerals required for manufacturing batteries, semiconductors, and renewable energy equipment. This move is expected to lower production costs for industries reliant on these materials, including electric vehicles, electronics, and clean energy technologies.

In addition, the government has made 35 items used in EV battery production and 28 items for mobile phone battery manufacturing duty-free, which will allow companies to import machines and tools for battery production without additional tax burdens. This initiative is designed to foster the growth of local battery production, reduce India’s reliance on imports, and encourage leading companies like Tata, Ola Electric, and Reliance to expand their operations within the country.

The tax exemptions are expected to result in cheaper EV batteries, making electric vehicles more affordable for consumers, and driving growth in India’s manufacturing sector. This will not only help reduce dependence on imports from countries like China but also support India’s renewable energy goals and enhance the competitiveness of the domestic industry.