Union Budget 2025: Government Waives Customs Duties on EV Battery Components
In the Union Budget 2025-26, the government has announced major tax exemptions to stimulate the production of lithium batteries and other related sectors.
By Reetika Bhatt
In a significant move aimed at promoting the electric vehicle (EV) sector, the Union Budget 2025 has announced a waiver on customs duties for key EV battery components. This strategic decision is set to reduce the cost burden on manufacturers, encouraging further investment in the rapidly growing EV market. By exempting duties on crucial materials like cobalt powder, zinc, and other essential components, the government aims to foster a competitive and sustainable EV ecosystem in India. The move aligns with the nation's commitment to reducing carbon emissions and achieving environmental sustainability. This initiative is expected to support both domestic manufacturers and global players, boosting the production of electric vehicles and enhancing the adoption of clean energy solutions across the country.
In the Union Budget 2025-26, the government has announced major tax exemptions to stimulate the production of lithium batteries and other related sectors. The goal is to strengthen local manufacturing capabilities, decrease reliance on imports, and lower the cost of electric vehicles (EVs) and electronics.
The Basic Customs Duty (BCD) has been eliminated on crucial materials such as cobalt, lithium-ion battery scrap, lead, zinc, and 12 additional vital minerals, all essential for manufacturing batteries, semiconductors, and renewable energy technologies.
This move is expected to reduce production costs for industries like EVs, clean energy, and electronics. These policy changes aim to promote domestic industry growth, create job opportunities, and position India as a key player in the global electric vehicle market.
Union Budget 2025-26: Reactions from the Auto Industry
Nagesh Basavanhalli, Vice Chairman, Greaves Cotton Limited said, 'We commend the government’s National Manufacturing Mission, which strengthens India’s position in mobility and energy. Lower import duties expanded PLI incentives, and a dedicated EV R&D push will drive local manufacturing, cost efficiency, and innovation. Skilling initiatives and e-mobility expansion will create a future-ready workforce, reinforcing India’s path to self-reliance in multi-fuel and sustainable transportation.'
Ajinkya Firodia, Vice Chairman and Managing Director, Kinetic Engineering Ltd. remarked, 'The Union Budget 2025-26 introduces several transformative measures for the automotive and electric vehicle (EV) sectors. Tax exemptions for lithium battery production, the removal of Basic Customs Duty on critical minerals, and the duty-free import of key EV battery production equipment reflect the government's strong commitment to bolstering domestic manufacturing and reducing import dependency. These steps will significantly enhance India’s position as a global hub for electric mobility and clean energy technologies. By fostering local innovation and ensuring cost efficiency, this budget lays the foundation for rapid industry growth and broader adoption of electric vehicles.'
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Madhumita Agrawal, Founder and CEO, Oben Electric said, 'The Union Budget 2025 is well balanced, in terms of supporting India’s aspirations of emerging as a global hub for tech and innovation, while supporting MSMEs – the nation’s backbone, and creating more job opportunities for the nation’s youth. Investments in Clean Tech will certainly give a boost to the EV sector. Exemption of basic customs duty on Cobalt Powder and lithium-ion battery waste, and including 35 additional capital goods for EV manufacturing, will give a significant push to indigenous manufacturing. This will not only ensure easy availability crucial, also boost domestic manufacturing and create more job opportunities for the nation’s youth. At the same time, the budget also has key provisions for boosting the next wave of entrepreneurship in the nation, including the New Fund of Funds with a fresh contribution of Rs 10,000 crore is a welcomed move, following the funding winter and dry spells that entrepreneurs had to endure in the previous year. Easing credit access to MSMEs is also a crucial move and will lead to better tech upgradation and more employment avenues for the nation's youth. At Oben, we commend these key developments in the Union Budget 2025 and stay committed to helping India’s move towards sustainability and clean energy.'
