EVs To Become More Affordable Under The New Budget: Top Things To Know

Published: Monday, February 3, 2025, 14:15 [IST]

Electric vehicles in India are set to become more affordable. Finance Minister Nirmala Sitharaman has proposed removing the Basic Customs Duty (BCD) on essential minerals for electric vehicle battery production. This initiative is part of the first full budget presented under the Modi government 3.0, aiming to boost local lithium-ion battery manufacturing and related sectors.

Tax Exemptions & Import Duty Reductions

In her budget speech, the Finance Minister announced a complete exemption from BCD on cobalt powder, lithium-ion battery waste and scrap, lead, zinc, and twelve other critical minerals. Additionally, import duties on essential equipment for battery production will be reduced. These measures are expected to decrease battery manufacturing costs, leading to lower electric vehicle prices.

Impact On Local Manufacturing

This move is anticipated to significantly benefit local companies such as Tata Motors, Ola Electric, Log9 Materials, and Reliance Industries. These firms are actively engaged in producing batteries and battery cells within India. By boosting local manufacturing, dependency on major suppliers like China and South Korea will be reduced.

Benefits For EV Sector

The tax exemptions are expected to significantly benefit the EV battery sector by boosting domestic production and driving innovation. This initiative aims to make electric vehicles more affordable while encouraging their adoption to reduce crude oil imports and tailpipe emissions. The central government has set a target for 30 per cent of overall sales to come from EVs by 2030.

The focus on local production aligns with India's vision for a circular economy. It fosters investment in battery recycling and strengthens the EV supply chain. The introduction of new capital goods for EV and mobile battery manufacturing is also expected to enhance local production capabilities and create job opportunities.

DriveSpark Thinks

Overall, these measures promise a significant boost for India's electric vehicle industry by making it more competitive globally while promoting sustainability through reduced emissions and reliance on imported crude oil.