The government has announced plans to totally exempt basic customs duty on 35 new capital items used in the fabrication of lithium-ion batteries for electric vehicles (EVs) in the union budget for 2025–2026 in an effort to increase local production of these batteries. Additionally, scrap lithium-ion batteries and scrap copper and cobalt, two essential minerals, are exempt from customs duties.
“I suggest adding 35 more capital goods for the production of EV batteries and 28 more capital goods for the production of mobile phone batteries to the list of exempted capital goods.” In her budget statement, Finance Minister Nirmala Sitharaman stated that “this will encourage the production of lithium-ion batteries domestically for use in electric cars and mobile phones.”
While the customs duty on the scrap of numerous essential minerals, including cobalt and copper, was between 2.5 and 10%, the duty on the waste and refuse of lithium-ion batteries, as well as the scrap of cobalt powder, lead, and zinc, was 5%. All of them were to be exempt from customs duties, according to the budget that was presented today.
EVs are thought to be a major factor in India’s transition to a low-carbon future. At the moment, South Korean, Japanese, and Chinese batteries are used extensively to power EVs in India. Since made-in-India lithium-ion batteries have the potential to accelerate the adoption of EVs and reduce the nation’s reliance on imports, localization of cell manufacturing is being closely examined.
However, the availability of raw materials is the largest obstacle to the production of lithium-ion batteries in India. Despite some recent finds, India does not have substantial quantities of minerals like lithium, cobalt, nickel, and graphite.
As a result, battery manufacturers are forced to rely on imported raw materials. China and Hong Kong are the main suppliers of India’s lithium-ion battery industry, which is mostly dependent on imports.
China controls a sizable portion of the world’s production and processing of vital minerals. China alone is in charge of processing 65%, 68%, and 60% of the world’s production of important commodities including nickel, cobalt, and lithium, respectively.
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