The Union Budget 2025-26 has announced significant tax exemptions to promote the production of lithium batteries and related sectors. The government aims to enhance local manufacturing, reduce dependence on imports, and make electric vehicles (EVs) and electronics more affordable.
The government has removed the Basic Customs Duty (BCD) on essential materials like cobalt, lithium-ion battery scrap, lead, zinc, and 12 other critical minerals. These materials are vital for manufacturing batteries, semiconductors, and renewable energy equipment. This measure will lower costs for industries reliant on these materials, such as EVs, clean energy, and electronics manufacturing.
Furthermore, 35 additional items used in EV battery production and 28 items for mobile phone battery manufacturing have been made duty-free. This allows companies to import machines and tools required for battery production without incurring extra taxes. The aim is to boost local battery production, reduce import reliance, and encourage companies like Tata, Ola Electric, and Reliance to expand their operations in India.
This initiative is expected to result in cheaper EV batteries, making electric vehicles more affordable. It will also lower production costs, boosting domestic manufacturing. A stronger local industry will reduce dependence on China and other countries, supporting growth in clean energy and aiding India’s renewable energy goals.
Sachidanand Upadhyay, MD, Lord's Mark Industries Limited said, "The National Manufacturing Mission announced in the Union Budget 2025 is a significant step towards bolstering India's clean tech manufacturing ecosystem. By enhancing domestic production of EV batteries, solar PV modules, wind turbines, and grid-scale batteries, this initiative will reduce dependency on imports and strengthen India’s position in the global renewable energy supply chain. The move complements the existing PLI schemes and will encourage backward integration, enabling Indian manufacturers to scale up operations efficiently."