Union Finance Minister, Nirmala Sitharam presented the Union Budget 2025 today with key updates for various sectors. Announcing the budget, the union minister presented new measures to enhance electric vehicle battery production in India. These changes aim to improve local manufacturing by focusing on reduced costs to support the growing demand for these new energy vehicles.
To support the demand for electric vehicles in the country, the union minister announced the addition of 35 capital goods to the list of materials exempted from Basic Custom Duty (BCD). These exemptions are aimed at bringing down the cost of manufacturing EV batteries in India. Specifically, it provides exemption for crucial raw materials like scrap from lithium-ion batteries, Cobalt powder, waste cobalt, lead, zinc, along with 12 other critical minerals.
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The initiatives presented in Budget 2025 are anticipated to benefit local manufacturing, leading to increased job opportunities within the industry. With the rising demand for electric vehicles in the country, these steps aim to establish India as a strong contender in the international EV market.
Auto Industry's Reaction
Santosh Iyer, MD & CEO, Mercedes-Benz India
Shailesh Chandra, President, SIAM
As the Auto Industry transits into cleaner powertrains, in line with the Hon'ble PM's vision on sustainable mobility, it will specifically benefit from the National Manufacturing Mission, which supports clean tech manufacturing for batteries, motors and controllers. Furthermore, the exemption of critical minerals (e.g. Cobalt, Lead, Zinc etc.), scraps of Lithium-ion battery, and 35 additional capital goods from customs duty, will help create a strong EV ecosystem in the country."
Dr Anish Shah, Group CEO & MD, Mahindra Group
The theme of "Make in India for the world" remains a key focus in this budget, with efforts to reduce India's manufacturing costs poised to significantly enhance the country's global competitiveness. In addition to providing an immediate stimulus for demand and growth, the budget emphasizes long-term growth through substantial infrastructure investments and a strong focus on innovation."
Jyoti Malhotra, Managing Director, Volvo Car India
"The Union Budget 2025-26 appears to be focused on stimulating consumer spending and fostering economic growth. Measures such as tax rationalization aim to increase disposable income and boost consumption. The government's commitment to maintaining capital expenditure, without raising taxes, is a positive step."
He added, "The emphasis on domestic value addition for EV batteries and the development of a comprehensive EV ecosystem, including battery recycling, customs duty exemption on 35 capital goods for EV battery manufacturing and charging infrastructure, are encouraging initiatives that should drive EV adoption across various segments. By focusing on demand-side incentives, without placing an undue burden on taxpayers, the budget seeks to create a favorable environment for EV growth. Overall, the budget seems to be forward-looking and focused on sustainable economic development."
Ajinkya Firodia, Vice Chairman and Managing Director, Kinetic Engineering Ltd.
"The Union Budget 2025-26 introduces several transformative measures for the automotive and electric vehicle (EV) sectors. Tax exemptions for lithium battery production, the removal of Basic Customs Duty on critical minerals, and the duty-free import of key EV battery production equipment reflect the government's strong commitment to bolstering domestic manufacturing and reducing import dependency. These steps will significantly enhance India's position as a global hub for electric mobility and clean energy technologies. By fostering local innovation and ensuring cost efficiency, this budget lays the foundation for rapid industry growth and broader adoption of electric vehicles."
Venkatram Mamillapalle, Country CEO and MD, Renault India
"We welcome the transformative vision of Finance Minister Nirmala Sitharaman in the Union Budget 2025. The budget's focus on agriculture, MSME development, investment, and exports sets a promising path for India's growth."
Dinesh Arjun, Co- Founder and CEO, Raptee. HV
Innovation and technology are the cornerstones of every developed nation, and India's vision for Viksit Bharat rightly prioritizes these pillars. The Finance Minister's focus on nurturing and investing in innovation is a commendable step toward accelerating new technologies that will shape our future. The allocation of a Deep Tech Fund will further strengthen India's industrial ecosystem, fostering a globally competitive, tech-driven economy.
A crucial boost to the EV industry comes with the exemption of Li-Ion batteries and other capital goods, which will significantly reduce battery costs and encourage further investment in domestic battery manufacturing. Given that batteries make up 30-40% of an EV's cost, this move will make EVs more affordable and accessible to consumers, driving mass adoption across two-wheelers, three-wheelers, and four-wheelers alike. By addressing a fundamental cost barrier, this initiative lays a strong foundation for the future of electric mobility in India. We are confident that these strategic measures will have a lasting positive impact on the EV ecosystem in the months to come.
Anshul Gupta, Managing Director, OPG Mobility
The Union Budget 2025-26 is a significant boost for the EV sector, addressing critical challenges and accelerating adoption. The Government's strong push for infrastructure development, including widespread EV charging stations and cost reduction in battery production, is a decisive step toward India's zero-emission and sustainable mobility vision.
With electric two-wheelers becoming the preferred choice for daily commutes, these measures will make EVs more accessible and affordable for all.
At OPG Mobility, we are committed to driving this transformation by offering durable and cost-effective mobility solutions. The Government's emphasis on domestic battery manufacturing and EV component production further strengthens our resolve to redefine the future of mobility with premium yet affordable electric two and three-wheelers.
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