India plans to lower the cost of electric vehicle (EV) battery production by removing duties on key raw materials and equipment, aiming to bolster domestic manufacturing and reduce reliance on China. The move is part of the country’s broader strategy to create a localized EV ecosystem and mitigate supply chain risks.
While presenting the 2025-26 budget, Finance Minister Nirmala Sitharaman outlined measures to improve access to critical minerals essential for battery production. “I propose to fully exempt cobalt powder and waste, the scrap of lithium-ion battery, lead, zinc, and 12 more critical minerals,” Sitharaman said. The government has yet to disclose the full list of these minerals, which are currently subject to customs duties ranging from 2.5% to 10%.
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India may also remove Basic Customs Duty (BCD) on machinery, tools, and equipment used in battery manufacturing. “To the list of exempted capital goods, I propose to add 35 additional capital goods for EV battery manufacturing,” Sitharaman added, without detailing the specific items included.
The announcement follows the release of the Economic Survey 2024-25, which underscored India’s heavy dependence on China for EV-related materials. According to the report, China processes 65% of the world’s nickel, 68% of cobalt, and 60% of lithium. India currently imports 75% of its lithium-ion batteries from China and has minimal domestic production of key components such as polysilicon, ingots, and wafers.
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India has identified 33 critical minerals essential to its economic security, with 24 of them vulnerable to supply disruptions. As part of its long-term strategy to achieve net zero emissions by 2070, the country aims to develop an integrated EV supply chain, similar to China’s, encompassing everything from mining to manufacturing.
Source: Indiabudget
