Union Budget 2026: FM Announces Import Exemptions on Battery Manufacturing to Boost EV Industry

During her budget speech in Parliament, Finance Minister Nirmala Sitharaman announced continued exemptions on the basic Customs Duty exemption given to Capital goods used for manufacturing lithium-ion cells for batteries to those used for manufacturing. Lithium-ion cells for battery energy storage systems.

The Union Budget 2026 has continued tariff exemptions on Lithium-ion to boost the EV industry. 

Moreover, FM Nirmala Sitharaman has also proposed to provide basic Customs Duty exemption to the import of capital goods required for the processing of critical minerals in India, especially on Bio Gas Blended CNG.

During her budget speech in Parliament, FM Nirmala Sitharaman announced the exclusion of the entire value of biogas while calculating the central excise duty payable on biogas-blended CNG.

Shailesh Chandra, President, SIAM and MD & CEO, Tata Motors Passenger Vehicles Ltd, said, “Continued exemption of Basic Customs Duty on Capital Goods used for manufacturing lithium-ion batteries, along with the extension of concessional duty benefits for lithium-ion cells and their parts used in manufacturing batteries for electric and hybrid vehicles for a further two years till March 2028, will enable creation of a robust EV ecosystem in the country.”

Jyoti Malhotra, Managing Director, Volvo Car India, said, “The maintenance and sustenance of growth will encourage consumption across the board, creating a larger market for high value items. Coupled with ease of handling direct taxation and customs related rules, the economy should continue in an upward trend. Overall the measures are targeted at maintaining the momentum of the Indian economy.”

Ravi Mehra, Managing Director, Uno Minda, said, “We particularly welcome the addition of 35 capital goods for EV battery manufacturing to the list of exempted capital goods, This move will meaningfully boost domestic manufacturing of lithium-ion batteries, reduce import dependence, and support the growth of electric mobility and energy storage in India. Measures to strengthen capital goods manufacturing, including high-tech toolrooms, will help improve scale, quality and cost efficiencies.

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 Raju Kumar, Partner and Energy Tax Leader, EY India, said, "On the tax front, exemptions for battery energy storage systems, lithium-ion cells, solar-glass inputs and biogas-blended CNG materially improve project viability. Collectively, these measures are likely to compress project costs, unlock private capital, and accelerate deployment of storage-backed renewables, while the restructuring of PFC and REC could improve credit flow and execution discipline across the power sector."