In a significant boost for India’s electric vehicle (EV) ecosystem, the automotive industry has warmly welcomed the government’s ambitious Union Budget 2025 announcements. Among the highlights is the customs duty exemption for capital goods used in lithium-ion battery manufacturing—a move expected to escalate local production and solidify the country’s clean mobility supply chain.
The Automotive Component Manufacturers Association (ACMA) of India praised the rationalisation of customs duties on critical raw materials and the elimination of inverted duty structures, calling it a “powerful step” toward cost-effective domestic manufacturing. This measure, coupled with duty elimination on scraps of essential materials like copper, cobalt powder, and lithium-ion batteries, is anticipated to fuel India’s EV advancement while supporting a cheaper feedstock for the critical mineral recycling industry.
The government continues its push for cleaner technologies with the launch of a National Manufacturing Mission aimed at fostering innovation across sectors, from solar PV cells to EV motors and batteries. Supporting this initiative, Clean Tech manufacturing is set to receive further policy support and an execution roadmap under the “Make in India” framework.
Shailesh Chandra, President of the Society of Indian Automobiles, stated that export promotion policies and efforts to integrate Indian manufacturers with global supply chains will open up new opportunities for the country, further boosting the industry’s ambitions on the world stage.
However, industry representatives tempered their enthusiasm with calls for additional steps. Abhijeet Sinha, Project Director for National Highways for Electric Vehicles (NHEV), emphasised the need for bolder investments in charging infrastructure and stronger incentives for fleet electrification. This, he suggested, would accelerate the adoption of EVs and foster investor confidence.
A lingering concern revolves around the Goods and Services Tax (GST) discrepancies. While EVs themselves are taxed at a favorable 5%, lithium-ion batteries and charging services still face an 18% GST, creating a financial strain on battery production and infrastructure development. Industry voices, including Ankit Sharma, CEO of Vidyuta, reiterated a long-standing request for equitable GST rates to unify the EV ecosystem.
Despite these challenges, the Budget’s broader provisions, such as higher personal income tax benefits and enhanced credit guarantees for small and medium enterprises, spark optimism. These measures are expected to ease financing for auto-tech startups and fleet expansions while boosting consumer spending, indirectly driving EV adoption.
As India gears up for a cleaner, greener future, the 2025 Budget reveals the government’s growing commitment to positioning the nation as a competitive player in the global EV market. While more steps are needed to energize the transition, the foundation for another win in India’s EV journey has been laid.
