Union Budget 2025: Tax Exemptions To Give Big Boost To Lithium Battery Production, Likely To Reduce EV Costs

The Union Budget 2025-26 has introduced substantial tax exemptions to boost lithium battery production and related industries.

The government aims to strengthen domestic manufacturing, reduce reliance on imports, and make electric vehicles (EVs) and electronics more affordable.

The Basic Customs Duty (BCD) has been removed on key materials such as cobalt, lithium-ion battery scrap, lead, zinc, and 12 other essential minerals.

These materials are crucial for manufacturing batteries, semiconductors, and renewable energy equipment. This decision is expected to lower costs for industries dependent on these resources, including EVs, clean energy, and electronics manufacturing.

Additionally, 35 more items used in EV battery production and 28 components for mobile phone battery manufacturing have been made duty-free.

This allows companies to import machinery and tools needed for battery production without extra tax burdens.

The objective is to promote local battery manufacturing, reduce import dependency, and encourage major firms such as Tata, Ola Electric, and Reliance to expand their operations in India.

This initiative is anticipated to result in more affordable EV batteries, thereby reducing the cost of electric vehicles.

Lower production costs will also enhance domestic manufacturing, reducing dependence on China and other countries while supporting India's clean energy goals.

Sachidanand Upadhyay, MD of Lord's Mark Industries Limited, commented: "The National Manufacturing Mission announced in the Union Budget 2025 is a significant step towards bolstering India's clean tech manufacturing ecosystem. By enhancing domestic production of EV batteries, solar PV modules, wind turbines, and grid-scale batteries, this initiative will reduce dependency on imports and strengthen India's position in the global renewable energy supply chain. The move complements the existing PLI schemes and will encourage backward integration, enabling Indian manufacturers to scale up operations efficiently."