The Union Budget for 2025, recently presented by India’s Finance Minister, Nirmala Sitharaman, includes important provisions for the automotive sector. A key focus of the budget is making electric vehicles (EVs) more affordable, with the aim of reducing their price and benefiting car buyers across the country.
Budget Exemption on EV Battery Materials to Lower Costs and Boost Market Growth
A key announcement in the new budget is the full exemption of the basic customs duty (BSD) on materials needed for producing lithium-ion batteries, which currently make up to 40% of an EV’s production cost. These batteries are largely imported from China and Taiwan. The budget removes the BSD on 35 types of capital goods used in lithium-ion battery manufacturing, which previously attracted customs duties ranging from 2.5% to 10%. This move is intended to reduce the cost of establishing EV battery manufacturing facilities in India, ultimately lowering production costs for zero-emission vehicles.
As a result, electric vehicles like the Tata Nexon, Hyundai Creta EV, and others are expected to become more affordable, making them a more attractive option for consumers. At the Bharat Mobility Global Expo, automakers highlighted their commitment to introducing new EV models. The Tata Nexon currently leads EV sales in India, followed by the MG Windsor EV. With upcoming launches, including the Mahindra BE 6, XEV 9e, Tata Harrier EV, and Hyundai Creta EV, the EV market is poised for significant growth.
2025 Budget Boosts Shift to Affordable Electric Vehicles in India
The changes introduced in the 2025 budget position the Indian auto sector for a shift towards more affordable and accessible electric vehicles, speeding up the transition to cleaner, greener transportation options.
Summary:
The 2025 Union Budget removes customs duties on materials for lithium-ion battery production, reducing EV manufacturing costs. This move aims to make electric vehicles more affordable, promoting a shift to cleaner transportation. Upcoming EV models and market growth are expected to drive the sector toward greater accessibility and sustainability.
