Import Duties on Battery Components Removed: A Boost for Indian EV Makers?

Finance Minister Nirmala Sitharaman , on 25th March, announced the elimination of import duties on 35 capital goods crucial for electric vehicle (EV) battery production and 28 key components required for mobile phone battery manufacturing to promote local assembly. Additionally, the central government reiterated its commitment to removing import duties on various raw materials essential for producing EV batteries and mobile phones.

Industry observers reckon that this move is part of a broader strategy to reduce tariffs and support local industries in countering the possible effects of reciprocal US tariffs.

While responding to the debate on the Finance Bill, which was passed by the Lok Sabha, the Finance Minister stated that the “Customs tariff rationalization” in Budget 2025 aims to boost domestic production, enhance export competitiveness by lowering duties on raw materials and inputs, and make domestic products more cost-effective."

It may be recalled that Finance Minister, in the Union 2025 Budget, announced an exemption on capital goods for lithium-ion battery production. This exemption was intended to reduce the cost of setting up production facilities for lithium-ion batteries, making it more affordable for manufacturers to invest in the necessary equipment.

"Our objective is to strengthen domestic manufacturing and enhance export competitiveness by reducing import levies on essential raw materials," noted Sitharaman while addressing parliament before the Finance Bill 2025 vote, adding, “As part of this initiative, India will exempt 35 key components used in EV battery production and 28 items required for mobile phone manufacturing from import duties, she stated.

Sitharaman acknowledged that this Finance Bill 2025 aims to rationalise tariff structure and address duty inversion. “These (steps) will also support manufacturing units, domestic value addition, promote exports, facilitate trade and also provide relief to the common people,” the FM noted.

It is pertinent to note that the Indian government has been taking measures to offset the potential impact of US. President Donald Trump's reciprocal tariffs, set to be implemented on April 2. It was earlier reported that discussions between India and the U.S. are ongoing to address tariff concerns and negotiate a bilateral trade agreement.