Budget 2025: EV Battery Will Become Cheaper With Custom Duty Exemption
The Union Budget is India’s yearly financial plan that guides the country’s economic course. Since the government has increased funding to support EV and battery manufacture, this year’s budget is very important for the automotive industry, especially MSMEs (Micro, Small, and Medium Enterprises). Three main categories comprise the incentives.
This budget upholds its pledge to establish India as a centre for the production of batteries and electric vehicles. In order to enhance domestic value addition in solar PV cells, EV batteries, motors, and controllers, a comprehensive Clean Tech manufacturing assistance program has been launched. As part of the plan, the exempted list will now include 35 more capital products for the production of EV batteries. The action is in line with the Economic Survey’s recommendations, which called for financial incentives like tax exemptions and subsidies to promote greener behaviours and grow the EV ecosystem.
Currently, China produces more than 60% of the essential EV materials, including lithium, nickel, and cobalt, and controls around 80% of the world’s battery production capacity. According to the poll, China’s influence is expanding in India as well due to a vertically integrated supply chain that spans from mining to EV production. Leading EV producers report a growing percentage of their total material expenditures coming from Chinese imports. With the drive for local manufacturing, venture capital investors also see the shift favourably and anticipate additional funding to enter the industry, especially in late-stage rounds.
The goal is to develop the full EV ecosystem, which includes establishing infrastructure for charging and supporting battery recycling. The development of high-capacity batteries and the advancement of battery technology research are given particular attention. The survival and expansion of automotive MSMEs, which are the foundation of the component manufacturing ecosystem, depend heavily on budgetary allocations for working capital support, money for technology upgrades, and better access to finance.
India has been encouraging the use of EVs through a number of programs, including the Scheme for Promotion of Manufacturing of Electric Passenger Cars in India (SPMEPCI), the Production-Linked Incentive (PLI) for auto components, and the Faster Adoption and Manufacturing of Electric Vehicles (FAME). A strong, independent automotive ecosystem is fostered by the Union Budget’s EV and battery production incentives, which also improve MSMEs, draw investments, and lessen India’s reliance on imports.
