With the goal of heavily localising EVs and making them more affordable, the Indian government plans to reduce the cost of battery production in the country. The country also aims to reduce its reliance on China and de-risk its supply chain with a more comprehensive local ecosystem.
Announcing India’s budget for 2025-26 on 1 February, Nirmala Sitharaman, the country’s Minister of Finance, proposed various measures to boost the localisation of EV batteries, including improving the supply of raw materials. “I propose to fully exempt cobalt powder and waste, the scrap of lithium-ion battery, Lead, Zinc, and 12 more critical minerals,” Sitharaman said. The government has not yet disclosed the complete list of these critical minerals. These materials are currently subject to customs duties of 2.5 to 10 per cent.
India may exempt machinery, equipment, and tools essential for manufacturing batteries from Basic Customs Duty (BCD). “To the list of exempted capital goods, I propose to add 35 additional capital goods for EV battery manufacturing,” Sitharaman said. Here, too, the government has not yet revealed complete details.
One day before revealing the new budget, Sitharaman presented the Economic Survey 2024-25. The document highlighted the world’s—and especially India’s—heavy reliance on China for EV-related critical minerals. Electric cars require nearly six times more minerals than conventional cars, primarily for batteries, and China dominates the supply chain of many of these. The country processes 65%, 68%, and 60% of the world’s Nickel, Cobalt, and Lithium output, respectively.
Currently, India sources 75% of lithium-ion batteries from China and has near negligible production for key components like polysilicon, ingots, and wafers, according to the Economic Survey 2024-25. The country’s Ministry of Mines found that 33 critical minerals are essential to its economic security, with 24 vulnerable to supply disruptions. India aims to achieve net zero emissions by 2070 and may need a fully integrated EV supply chain like China, which spans everything from mining to manufacturing.
indiabudget.gov.in, indiabudget.gov.in (both PDF)