The much-awaited time of the year is finally here - The Budget! Finance Minister Nirmala Sitharaman has brought great news for electric vehicle buyers under The Union Budget 2025.
As per the Budget, the Basic Customs Duty (BCD) on critical minerals required for EV battery manufacturing has been scrapped. This decision is expected to significantly reduce the cost of EVs in India, making them more accessible to the masses.
The government has set a bold target of ensuring that 30% of all new vehicle sales in India are electric by 2030.
Will it be a big win or not? Should you buy an EV right now or not?
Let’s discuss it below.
Why Are Electric Vehicles About to Get Cheaper?
One of the biggest hurdles in EV affordability is the high cost of batteries, which account for nearly 40-50% of an EV's total price. To tackle this issue, the Finance Minister has removed import duties on key raw materials used in battery production, including:
Lithium-ion battery scrap
Cobalt powder
Lead
Zinc
12 other critical minerals essential for EV battery manufacturing
The cost of importing these materials will drop, allowing battery manufacturers to produce EV batteries at lower costs if these duties are cut. This, in turn, will make electric cars, scooters, and commercial vehicles significantly cheaper for Indian consumers.
Boosting Domestic EV Manufacturing and Self-Reliance
While lowering EV costs is a primary goal, this policy change is also a major step towards making India self-reliant in electric vehicle production.
India has been heavily dependent on imports of essential battery materials, primarily from China. This has led to supply chain disruptions and price fluctuations.
By removing import duties on raw materials while continuing duties on finished battery imports, the government is encouraging local production and investment in battery manufacturing.
This will create a robust domestic EV ecosystem, strengthening India's position as a global leader in clean transportation.
Some key benefits of this policy include:
Strengthening India's local battery manufacturing industry
Encouraging investments in lithium-ion cell production and battery recycling
Reducing reliance on foreign countries for battery materials
Boosting employment opportunities in the EV and battery manufacturing sector
This shift aligns with India’s National Electric Mobility Mission Plan (NEMMP) and Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) schemes, both of which focus on accelerating EV adoption.
Industry Experts Hail the Budget Move
The auto and EV industries have welcomed the government’s decision, highlighting its potential to revolutionize India’s electric mobility sector.
Here’s what some top industry leaders had to say:
Saket Mehra, Auto & EV Industry Leader, Grant Thornton Bharat
"The exemption of customs duties on lithium-ion batteries and the launch of the National Critical Mineral Mission are game-changing steps. Lower import costs will make EVs more affordable, while investment in battery manufacturing and electrolyte production will drive long-term self-reliance. These initiatives will help reduce supply chain vulnerabilities and position India as a leader in clean mobility."
Girish Wagh, Executive Director, Tata Motors
"The Union Budget 2025 provides a strong roadmap for economic growth and green mobility. The removal of basic customs duties on critical battery materials will strengthen domestic EV production and boost the Make in India initiative. As infrastructure improves and consumer demand rises, India’s transition to a sustainable EV ecosystem will accelerate."
Shradha Suri Marwah, President, ACMA
"This budget is growth-oriented and focuses on strengthening the auto and EV industries. The emphasis on domestic manufacturing, innovation, and MSME support will create a strong foundation for India’s EV future."
How Will This Affect Indian Consumers?
The biggest takeaway from this budget announcement is that EV prices are set to drop. Here’s how this move will impact the Indian EV market:
More Affordable EVs – Lower battery costs will translate into cheaper electric cars, bikes, and commercial vehicles.
Increased EV Adoption – Lower prices will encourage more people to switch from petrol/diesel vehicles to environment-friendly electric alternatives.
Improved Charging Infrastructure – The rise in EV adoption will push both government and private players to expand charging networks across the country.
Greater Investment in Local Manufacturing – The tax exemptions will attract global EV manufacturers to set up production facilities in India, boosting employment and economic growth.
Long-Term Energy Security – By promoting domestic battery production, India will reduce its reliance on foreign countries, making its EV industry more resilient and self-sufficient.
India’s Road to a Cleaner, Greener Future
The Indian government’s latest budget measures are a clear indication that it is serious about building a sustainable EV ecosystem.
With battery costs coming down and local production increasing, the transition to green mobility will happen at a much faster pace.
India has already seen a surge in EV adoption in recent years, with companies like Tata Motors, MG Motors, Ola Electric, and Ather Energy leading the charge.
With lower costs and government incentives, EVs are expected to become the preferred choice for millions of Indian consumers in the coming years.
Final Thoughts
A Win-Win for Consumers and the Industry! The Union Budget 2025 has laid the foundation for a massive EV revolution in India. By removing import duties on essential battery materials, the government is ensuring that - Electric vehicles become more affordable, Domestic manufacturing gets a significant boost and India moves closer to its Net Zero emissions goal.
With supportive government policies, increasing consumer interest, and rapid infrastructure development, the dream of making India a global EV powerhouse is closer than ever before. If these trends continue, it won’t be long before EVs dominate Indian roads.
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