Budget 2025: Electric vehicles to get cheaper? Here's what FM Nirmala Sitharaman said in her speech

Finance Minister Nirmala Sitharaman on Saturday announced major tax exemptions in the Union Budget 2025-26 to promote local production of lithium batteries and related industries. This move aims to reduce dependence on imports, lower costs for electric vehicles (EVs) and electronics, and strengthen India’s clean energy sector.

The government has removed the Basic Customs Duty (BCD) on key materials such as cobalt, lithium-ion battery scrap, lead, zinc, and 12 other critical minerals. These materials are essential for making batteries, semiconductors, and renewable energy equipment. By removing these taxes, industries that rely on these materials—such as EVs, clean energy, and electronics manufacturing—will benefit from reduced production costs.

In addition, 35 items used in EV battery production and 28 items for mobile phone battery manufacturing have been made duty-free. This means companies can now import the necessary machines and tools for battery production without extra charges. The policy is expected to encourage major companies to expand their manufacturing operations in India.

These changes could lead to cheaper EV batteries, making electric vehicles more affordable for consumers.

Lower production costs will boost domestic manufacturing, creating jobs and reducing India’s reliance on imports from countries like China.