Updated 16:39 IST, February 1st 2025
Union Budget 2025: FM Announces exemption on EV battery manufacturing, Prices May Drop
During her budget speech at the Parliament, Finance Minister Nirmala Sitharaman announced exemptions on EV battery manufacturing.

Union Budget 2025: The Union Budget 2025 has important tariff exemptions for the automotive sector. FM Nirmala Sitharaman stated multiple reductions on basic customs duty (BCD) to enhance the manufacturing of lithium batteries for electric vehicles. The government aims to improve manufacturing locally and make electric vehicles more affordable.
During her budget speech at the Parliament, Finance Minister Nirmala Sitharaman announced support for clean-tech manufacturing. FM stated that this would help in the development of solar PV cells, batteries for electric vehicles, motors, and controllers. “Given our commitment to climate-friendly development, the Mission will also support Clean Tech manufacturing. This will aim to improve domestic value addition and build our ecosystem for solar PV cells, EV batteries, motors, and controllers,” Sitharaman said.
“The set up of National Manufacturing Mission and exemption on capital goods will accelerate domestic clean tech manufacturing, enhance EV battery production, and strengthen India’s renewable energy ecosystem. A robust EV infrastructure is crucial for industry growth and seamless integration of electric mass mobility,” Devndra Chawla – CEO & MD – GreenCell Mobility, said.
Further, basic custom duties (BCD) on 35 additional items used in the production of EV batteries have been removed. This results in lower production costs of batteries of electric vehicles, which may bring down the upfront cost of the EVs and aims to boost domestic manufacturing. For mobile phones, 28 additional capital goods have been added to the exemption list, which the minister said will boost mobile phone battery manufacturing.
“The government’s decision to fully exempt Basic Customs Duty on critical minerals like cobalt and lithium-ion battery waste will secure essential resources for domestic manufacturing while fostering job creation. The customs duty exemption on 35 capital goods for EV battery manufacturing is another welcome move, as batteries account for nearly 40% of an EV’s cost. Any cost reduction in this segment will directly make EV adoption more affordable for consumers,” Mr Hyder Ali Khan, CEO & Director, Godawari Electric Motors, said.
“The National Manufacturing Mission and incentives for solar, EV batteries, and clean mobility infrastructure will accelerate the growth of the EV sector while making India a global hub for sustainable mobility. Additionally, the increase in FDI for insurance to 100% will bring more competition and innovative financing options for auto buyers, further stimulating demand,” Mr C S Vigneshwar, FADA President said.
“The removal of basic customs duties on key materials for battery manufacturing is a strategic move to boost domestic EV production, foster a sustainable ecosystem, and drive India's transition to a greener economy,” Mr Girish Wagh, Executive Director, Tata Motors
Published 12:27 IST, February 1st 2025