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Government Policies

Budget 2025 Drops Tariffs & Supercharges Battery Industry – A Huge EV Push

Budget 2025 accelerates India's EV growth with reduced tariffs, key battery production incentives, and customs duty exemptions. These reforms aim to boost local manufacturing, attract global investment, and position India as a leader in electric mobility.

Tabish Sultan

Tabish Sultan

1st February, 2025

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Budget 2025-26 Announcements

The Union Finance Minister Nirmala Sitharaman announced key measures in Budget 2025 today to establish India as a global leader in electric mobility by enhancing EV and battery production capabilities. The government expressed its commitment to sustainable transport technology and job creation through Lok Sabha announcements that energized the EV sector.

A Clean Tech Leap Forward

The Budget’s EV thrust focuses on a Clean Tech manufacturing support programme which aims to increase local production of key EV components like batteries, motors, and controllers. The initiative includes expanded customs duty exemptions for 35 extra capital goods needed for EV battery production which creates cost advantages for local manufacturers and generates investor excitement.

Credits: Moneycontrol, Youtube

Securing Critical Minerals

Sitharaman declared the removal of Basic Customs Duty (BCD) on essential minerals needed for EV battery production to promote self-reliance.

In the July 2024 Budget, I had fully exempted BCD on 25 critical minerals that are not domestically available. I had also reduced BCD of 2 other such minerals to provide a major fillip to their processing especially by MSMEs. Now, I propose to fully exempt cobalt powder and waste, the scrap of lithium-ion battery, lead, zinc, and 12 more critical minerals,” the Finance Minister stated.

The industry anticipates this decisive move to cut production expenses substantially while maintaining the supply chain’s strength and competitive advantage. The government seeks to advance manufacturing processes and invite international investment while fostering innovation by eliminating restrictions on essential minerals such as cobalt and lithium-ion battery waste as well as lead, zinc and other materials.

Union Finance Minister Nirmala Sitharaman announced Budget 2025
Credits: nsitharaman, Instagram

Strengthening Homegrown Manufacturing

India’s manufacturing foundation will strengthen through the relaxation of import duties on crucial battery production equipment. The policy will boost domestic production capabilities which will allow local manufacturers to increase their output quickly to fulfill growing demand. The unified policy changes should propel India toward its target of 30% electric vehicle penetration by 2030 while supporting the country’s broader environmental and climate objectives.

Revamped Tariff Structure for Automotives

Beyond the battery segment, Sitharaman announced a series of tariff rate adjustments for automotive imports:  

  • Luxury Motor Cars and SUVs: For vehicles priced above $40,000, the luxury motor cars and SUVs tariff rate has been decreased from 125% to 70% under tariff heading 8703. The combined rate consists of a 70% base rate along with an additional 40% Agriculture Infrastructure and Development Cess (AIDC). 
  • Used Motor Cars:  Used Motor Cars experienced a tariff reduction from 125% to 70% resulting in an effective rate of 70% plus 67.5% AIDC. 
  • Motorcycles: The tariff for used motorcycles under tariff heading 8711 decreases from 100% to 70% which results in an effective rate of 70% plus 40% AIDC while new motorcycles remain unaffected. 
  • Bicycles: The tariff on bicycles has decreased from 35% to 20% with 15% AIDC added.
  • Yachts and Recreational Vessels: The tariff on Yachts and Recreational Vessels has decreased from 25% to 20% and it now includes an additional charge of 7.5% AIDC.

The government’s policy measures demonstrate its commitment to transforming India into a competitive manufacturing sector and consumer market while balancing domestic capacity building with technology acquisition.

Watch The Complete Budget 2025 Live Session Below:

Credits: CNBC-TV18, Youtube

Future Outlook of The Budget 2025 on EVs!

Industry leaders, environmental advocates and market analysts have given strong praise to today’s Budget 2025 declarations. The government’s vision for a cleaner, greener future becomes more achievable through generous duty exemptions and targeted tariff reductions as well as a strong focus on battery manufacturing.

If these policies bear fruit, the year 2025 could well be remembered as a watershed moment for India’s electric mobility revolution, driving innovation, creating jobs, and positioning the nation as a global hub for EV technology.

We are confident these initiatives will not only enhance India’s EV ecosystem but also create a thriving market for advanced battery technologies, one leading EV manufacturer remarked.

Indeed, with widespread optimism and a steady surge in consumer interest, the road ahead for India’s EV sector has never looked more promising.

Tabish Sultan

Tabish Sultan

Author

Tabish is a passionate about automotive writing, focused on uncovering trends, innovations, and industry shifts. With a detail-oriented approach and a passion for storytelling, he crafts content that engages both enthusiasts and everyday readers.

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