In a significant move during the Union Budget presentation, Finance Minister Nirmala Sitharaman announced a series of tax exemptions on key components required for lithium-ion battery manufacturing, aimed at accelerating the growth of India’s electric vehicle (EV) industry. This strategic decision is expected to drive down production costs, encourage domestic manufacturing, and ultimately make EVs more accessible to consumers.
The Finance Minister, Nirmala Sitharaman, has proposed to add 35 additional capital goods for EV battery manufacturing and 28 for mobile phone battery production to the list of exempted items. This measure is intended to boost the domestic manufacture of lithium-ion batteries, which are crucial for both electric vehicles and mobile devices.
“The exemption will cover 35 additional capital goods for EV battery production and 28 for mobile phone battery manufacturing, enhancing domestic battery production capacity,” said Saket Mehra, a partner at Grant Thornton.
Industry experts believe that this exemption will significantly reduce the cost of production for EV manufacturers. Pritesh Mahajan, CEO of Revamp Moto, noted that exempting Basic Customs Duty (BCD) on cobalt powder, lithium-ion battery waste, scrap, and other critical minerals will ensure raw material availability for domestic manufacturing. “This exemption is expected to reduce production costs, encourage companies to expand operations, drive technological innovations, and create high-value jobs,” he added.
The Clean Tech Mission, as part of this initiative, will also help improve domestic value addition and build the local ecosystem for solar PV cells, EV batteries, motors and controllers, electrolyzers, wind turbines, very high voltage transmission equipment, and grid cell batteries.
In conclusion, the government’s decision to exempt customs duties on key EV battery components can be a significant step towards fostering a robust and self-reliant electric vehicle industry in India. By reducing production costs and encouraging domestic manufacturing, this move is poised to make EVs more accessible to the masses, ultimately contributing to the country’s sustainable mobility goals.
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