Budget 2025: THIS is why electric vehicles will become cheap in India

Finance Minister Nirmala Sitharaman announced the budget for 2025-2026 on Saturday. Sitharaman has proposed several key measures to bolster the electric vehicles industry. Notably, the government has decided to remove Basic Customs Duty (BCD) on specific key minerals that affect EV batteries. Here is everything FM announced for the automobile sector.

To encourage domestic manufacturing, the government has rolled out tax incentives, which include exemption from Basic Customs Duty on minerals like cobalt powder, zinc, lead, lithium-ion battery residual and other scraps.

Further, as the government reduces the import duties on battery production minerals, it will encourage the industry leaders to offer EV batteries at lower costs, making EVs cheaper overall.

In a further boost to manufacturing, the list of exempted capital goods has been expanded to include 35 additional items for EV battery production and 28 more for mobile phone battery manufacturing. These exemptions are expected to stimulate the local supply chain and drive India’s ambitions in green energy and digital device production.

According to Girish Wagh, Executive Director, Tata Motors, the Union Budget 2025 lays out a roadmap for long-term transformation, driving India closer to its vision of a ‘Viksit Bharat’.

Wagh stated, “The continued allocation of over Rs. 11 lakh crore in capital expenditure, alongside targeted initiatives to boost consumption, support ‘Make in India’. The removal of basic customs duties on key materials for battery manufacturing is a strategic move to boost domestic EV production, foster a sustainable ecosystem, and drive India's transition to a greener economy. As infrastructure projects gain momentum and consumption picks up, improved roads, connectivity, and logistics will undoubtedly drive increased demand for freight and commercial transport solutions driven by both domestic demand and broader economic recovery.”

Naveeth Menon, VP – Sales and Marketing Operations, BAXY Mobility, highlighted, "The budget introduced groundbreaking initiatives to accelerate the shift toward lithium-ion batteries in the EV sector. Tax exemptions for lithium-ion battery manufacturing are set to enhance local production capabilities, positioning India as a global hub for EV manufacturing. The move aligns with India’s broader goals of reducing carbon emissions and achieving energy independence."