Affordable EVs on the Horizon: Insights from Budget 2025
1 month ago | 5 Views
Electric vehicles are poised to become more affordable following Finance Minister Nirmala Sitharaman's proposal to eliminate the Basic Customs Duty (BCD) on essential minerals used in the production of electric vehicle batteries. This announcement was made during the presentation of the first comprehensive budget under the Modi government 3.0, which includes significant exemptions aimed at enhancing domestic manufacturing of lithium-ion batteries and related industries.
Exemption on critical minerals and reduction in import duties
In her address, Finance Minister Nirmala Sitharaman declared a complete exemption from BCD on cobalt powder, lithium-ion battery waste and scrap, lead, zinc, and twelve additional critical minerals. Furthermore, the minister revealed a reduction in import duties on vital equipment for battery production, which is expected to further decrease the costs associated with battery manufacturing. Consequently, this will contribute to lowering the overall expenses of electric vehicle production.
How do EVs become more affordable?
This initiative will serve as a substantial advantage for domestic companies such as Tata Motors, Ola Electric, Log9 Materials, and Reliance Industries, all of which are actively engaged in the production of batteries and battery cells within India. Enhancing local manufacturing capabilities will significantly reduce reliance on foreign markets, particularly China and South Korea, which are currently the primary suppliers of batteries to India.
In response to the announcement, Rajesh Gupta, Founder & Director of Recyclekaro, stated, "The Union Budget 2025 represents a pivotal advancement in fortifying India's battery recycling and manufacturing framework. The exemption of Basic Customs Duty (BCD) on critical minerals such as cobalt, lithium-ion battery scrap, lead, and zinc will improve the availability of domestic resources, lessen import dependency, and expedite value addition within the country. This initiative is in line with India's vision for a circular economy, promoting investment in battery recycling and electric vehicle supply chains. The inclusion of new capital goods for electric vehicle and mobile battery manufacturing will further enhance local production and job opportunities."
How does it benefit?
The EV battery sector will majorly benefit from the tax exemption, boost the domestic sector, and drive innovation. The announcement promises to make electric vehicles more affordable and is also a step further towards encouraging the adoption of electric vehicles to minimise crude oil imports and tailpipe emissions while promoting sustainability. The central government aims to achieve 30 per cent of overall sales coming from EVs by 2030.
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