Budget 2025: Duty Cuts to Boost 'Made in India' Energy Transition

05 Feb 2025

The budget has sought to enhance the domestic manufacturing value chain for critical components of India's energy transition by reducing customs duties on solar cells and modules, as well as key inputs for electric vehicle battery production. In her budget speech, Finance Minister Nirmala Sitharaman announced that 35 additional capital goods used in the manufacturing of lithium-ion batteries will now be exempt from basic customs duty.

“This initiative will not only speed up the adoption of clean technologies but also establish a strong supply chain that supports India's carbon neutrality targets for 2070,” said Vikram Gulati, Country Head of Toyota Kirloskar Motor. A battery typically accounts for 30-40% of an EV's total cost. Currently, EV makes up approximately 5-6% of total two-wheeler sales in India, while electric cars represent around 2-3% of overall car sales.

Sitharaman also declared a full exemption from basic customs duty on cobalt powder, lithium-ion battery waste and scrap, lead, zinc, and 12 other essential minerals. “These measures will greatly strengthen India’s standing as a global hub for electric mobility and clean energy technologies. By promoting local innovation and ensuring cost-effectiveness, this budget sets the stage for rapid industry growth and wider adoption of EVs,” said Ajinkya Firodia, Vice-Chairman and Managing Director of Kinetic Engineering.

Bringing Renewable Energy into Your Home

The budget has reduced the tariff rate on solar modules, other semi-conductor devices, and photovoltaic cells to 20%, down from 40%, while the tariff for solar cells has been reduced to 20% from 25%. Finance Minister Sitharaman emphasized that the government is committed to supporting clean technology manufacturing and enhancing domestic value addition.

It will also foster the growth of India's ecosystem for solar photovoltaic cells, EV batteries, motors, controllers, electrolysers, wind turbines, high-voltage transmission equipment, and grid-scale batteries. To enhance private sector involvement in the nuclear industry, the finance minister also proposed amendments to the Atomic Energy Act and the Civil Liability for Nuclear Damage Act.