Abolishing Customs Duty on Lithium-Ion Batteries to Accelerate EV Production
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Synopsis
The recent removal of basic customs duty on lithium-ion battery imports is set to bolster the local battery storage industry in India. Finance Minister Nirmala Sitharaman's budget proposals aim to enhance domestic production of batteries for electric vehicles and mobile devices.
Key Takeaways
- Removal of customs duty on lithium-ion battery imports.
- 35 new capital goods added for EV battery production.
- Customs duty on lithium-ion battery waste reduced to zero.
- Anticipated 33% growth in renewable power capacity.
- Indigenization of electric vehicles enhances local manufacturing.
New Delhi, Feb 1 (NationPress) The elimination of basic customs duty on the importation of lithium-ion battery scrap and the capital goods necessary for their production will significantly enhance the domestic battery storage sector, industry experts stated on Saturday.
In her Union Budget 2025-26 address, Finance Minister Nirmala Sitharaman announced the inclusion of 35 new capital goods for EV battery production and 28 additional items for mobile phone battery manufacturing in the list of exempted capital goods.
According to FM Sitharaman, “This initiative will promote local production of lithium-ion batteries for both mobile devices and electric vehicles.”
The Union Budget also suggested reducing customs duty on lithium-ion battery waste and scrap from 5% to zero.
Ankit Hakhu, Director at Crisil Ratings Ltd., mentioned that the growth of battery-backed renewable projects, expected to account for over 33% of India's renewable power capacity additions in the coming 3-5 fiscal years, will gain from better cost control, quality, and supply of battery systems.
Ashok Chandak, President of the India Electronics and Semiconductor Association (IESA), noted that the reduced customs duty on display panels and lithium-ion batteries will increase local value addition in the manufacturing of EVs and mobile devices.
Angshuman Bhattacharya, Partner and National Leader in the Consumer Product and Retail Sector at EY-Parthenon, stated that the indigenization of electric vehicles and lithium carbonate batteries will foster a robust domestic ecosystem.
The Budget additionally encourages the production of renewable energy components, particularly lithium-ion batteries, by extending the critical minerals list for BCD waiver.
In the July 2024 Budget, the Centre had fully exempted BCD on 25 critical minerals that are not available domestically.
FM Sitharaman further proposed to fully exempt cobalt powder and waste, as well as scrap from lithium-ion batteries, Lead, Zinc, and 12 other critical minerals. This will ensure their availability for manufacturing in India and foster job creation for the youth,” stated FM Sitharaman.
