Budget 2025: 'Made in India' energy transition gets boost with duty cuts

Customs duties on input goods for electric vehicles, solar panels slashed

The Budget has sought to further domesticate the manufacturing value chain for key segments of India's energy transition by slashing Customs duties on solar cells and modules along with key inputs for manufacturing electric vehicle (EV) batteries.

 

During her Budget speech, Finance Minister Nirmala Sitharaman said that 35 additional capital goods, which are used in lithium-ion battery manufacturing, will now be exempt from basic Customs duty.

“This will not only accelerate clean technology adoption but also create a robust supply chain supporting India's carbon neutrality goals for 2070,” Vikram Gulati, country head, Toyota Kirloskar Motor, said. Battery generally comprises about 30-40 per cent of an EV’s total cost. 

 

Currently, EV penetration in two-wheeler sales in India is about 5-6 per cent while the share of electric cars in total car sales is about 2-3 per cent.

 

Sitharaman also announced that she is fully exempting cobalt powder and waste, the scrap of lithium-ion battery, lead, zinc and 12 more critical minerals from basic Customs duty.

 

“These steps will significantly enhance India’s position as a global hub for electric mobility and clean energy technologies. By fostering local innovation and ensuring cost efficiency, this Budget lays the foundation for rapid industry growth and broader adoption of EVs,” Ajinkya Firodia, vice-chairman (V-C) and managing director (MD), Kinetic Engineering, said.

 

Bringing home renewables

 

The Budget has halved the tariff rate on solar modules, other semiconductor devices and photovoltaic cells to 20 per cent from 40 per cent, while for solar cells, it has been reduced to 20 per cent from 25 per cent.

 

Sitharaman said the government will support clean tech manufacturing and improve domestic value addition.

 

It will also help build the Indian ecosystem for solar photovoltaic cells, EV batteries, motors, controllers, electrolysers, wind turbines, very high voltage transmission equipment and grid scale batteries.

 

To boost private sector participation in the nuclear sector, the FM also proposed amendments to both the Atomic Energy Act and the Civil Liability for Nuclear Damage Act.

 

The Budget also proposed a ~20,000 crore Nuclear Energy Mission for research & development of Small Modular Reactors (SMR). At least five of these will be indigenously developed and operationalised by 2033.