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In the first full budget of the central government, Finance Minister Nirmala Sitharaman has proposed the removal of Basic Customs Duty (BCD) on critical minerals required for electric vehicle battery manufacturing. This move is a significant effort to make electric vehicles more affordable and aligns with the government's goal of achieving a 30% share of electric vehicles in total automobile sales by 2030. This initiative is set to accelerate India’s transition toward a sustainable future.
To encourage domestic manufacturing, the Finance Minister announced tax incentives, including a full exemption from BCD on cobalt powder, lithium-ion battery scrap and waste, lead, zinc, and 12 other critical minerals.
Additionally, reducing import duties on equipment required for battery production will lower the cost of EV batteries, making electric vehicles more affordable. This reduction in operational expenses will expand India’s EV battery industry and boost domestic production capabilities.
This strategic move toward self-reliance will not only reduce dependence on foreign supply chains but also promote clean transportation. By developing a local battery ecosystem, the initiative will strengthen India’s renewable energy goals, reinforce climate commitments, and ensure energy security through indigenous innovation. Let’s look at the EV industry’s response.
Vikram Handa, Managing Director of Epsilon Advanced Materials shared his thoughts on the budget: "The central budget 2025’s clear focus on clean technology, particularly with the launch of the Clean Tech Mission, is incredibly exciting. The emphasis on electric vehicles (EV) and battery technologies aligns perfectly with India’s ambition to create a sustainable mobility ecosystem. At Epsilon Advanced Materials, we are particularly excited about initiatives promoting the domestic manufacturing of EV batteries and their components. The exemption from BCD on cobalt powder, lithium-ion battery scrap, lead, zinc, and 12 other critical minerals is a crucial step forward."
To further boost domestic production, 35 additional items used in EV battery manufacturing have been included in the list of duty-free capital goods, reducing reliance on imports. This provides the industry with a strong incentive to invest in expanding its domestic capabilities. The overall approach of the budget is highly commendable as it moves towards developing a strong clean tech ecosystem and positions India to lead the global clean energy transition. We are fully prepared to play a pivotal role in this exciting development journey.
Anagh Ojha, Co-Founder and CTO of Urja Mobility said, "Budget 2025 marks a significant step towards strengthening India’s EV and energy storage ecosystem. The introduction of the Critical Mineral Mission aims to promote domestic production, overseas acquisition, and recycling of essential minerals like lithium, cobalt, and nickel that are critical for battery manufacturing. Additionally, the government has removed customs duties on 25 critical minerals, including lithium and copper, which will reduce the import costs of key raw materials."
This move will encourage local battery manufacturing, reduce import dependency, and make EVs more affordable. The continued focus on PLI schemes and incentives for battery storage and EV production signals the government’s commitment to clean mobility. However, the success of this initiative will depend on policy clarity and ensuring a stable supply chain.
For startups and businesses in the EV and energy storage space, these measures present new opportunities, but agility in adapting to policy shifts will also be necessary. If complemented by financing solutions and infrastructure expansion, India can accelerate its transition to sustainable mobility. Overall, Budget 2025 lays a strong foundation for India’s energy future, but industry collaboration and effective execution will be key to unlocking its full potential.
Dev Arora, Founder and CEO of Alt Mobility commented, "Budget 2025 is a revolutionary step for the electric vehicle (EV) sector, particularly with the cuts in Basic Customs Duty (BCD) on materials required for lithium-ion batteries. This will significantly lower production costs and help accelerate the growth of a zero-emission vehicle ecosystem in India. The full exemption of customs duty on 35 capital goods for EV manufacturing, combined with the ₹10,000 crore Clean Tech Mission, will drive innovation and help create a self-sustaining, local ecosystem for EV batteries, motors, and controllers."
This will reduce our reliance on imports and make cutting-edge, sustainable technology more accessible to manufacturers, paving the way for a truly green future. The budget also places a special focus on MSMEs, particularly in the auto component sector, with easier credit access and a doubled credit guarantee cover to ₹10 crore. This will empower smaller auto component manufacturers to scale up and contribute to India’s clean mobility transition.
At Alt, we are excited about the government’s strategic focus on clean tech and local manufacturing. This will not only reduce costs but also position India as a global leader in EV and clean energy solutions, fostering long-term growth and promoting a cleaner, greener future.
Conclusion
Budget 2025’s reforms aimed at promoting the EV and clean energy sector will strengthen domestic production and reduce import dependence. Exemptions on customs duties, expansion of PLI schemes, and financial support for MSMEs will accelerate the industry. If these policies are implemented effectively, India can quickly establish global leadership in the EV and green energy sectors.
