Customs duty waiver on critical minerals like lithium, cobalt for EV battery

Lower battery cost would lead to reduced prices of the vehicle and a further stimulus to the EV industry. Image Credit: Pixabay

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26 Aug, 2025 12:21

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Basic customs duty on critical minerals like Cobalt and Lithium, critical for Electric Vehicle (EV) batteries, have been fully exempted in the Union Budget presented on July 23.  The move is expected to play an instrumental role in reducing the input costs for manufacturing lithium-ion batteries in the country.

“Minerals such as lithium, copper, cobalt and rare earth elements are critical for sectors like nuclear energy, renewable energy, space, defence, telecommunications, and high-tech electronics,” FM Sitharaman said in her budget speech before the Parliament.

“I propose to fully exempt customs duties on 25 critical minerals and reduce BCD (Basic Customs Duty) on two of them. This will provide a major fillip to the processing and refining of such minerals and help secure their availability for these strategic and important sector," she said in the Budget speech.

Shares of Exide Industries and Amara Raja saw muted reaction during the trade on July 23.

Underscoring the criticality of steel and copper as important raw materials, Nirmala Sitharaman said, "To reduce their cost of production, I propose to remove the BCD on ferro nickel and blister copper. I am also continuing with nil BCD on ferrous scrap and nickel cathode and concessional BCD of 2.5 per cent on copper scrap."

India Inc Reacts

Industry players reckon the move by Finance Minister will help substantially lower the production costs of battery cells, directly translating into more affordable electric vehicles (EVs) for consumers. The exemption of customs duties on 25 critical minerals provides a major fillip to the processing and refining sectors.

"By reducing manufacturing expenses, the overall cost of EV batteries will decrease, making electric vehicles a more economically viable option. This initiative not only supports the growth of the EV industry but also reinforces India's commitment to sustainable mobility solutions,” said Pratik Kamdar, CEO & Co-Founder, Neuron Energy.

On similar lines, Uday Narang, Founder and Chairman, Omega Seiki Mobility said, “The exemption of import duties on critical minerals, including lithium, is a significant step towards reducing the manufacturing costs of batteries and making electric vehicles more affordable for consumers.

To be sure, the battery constitutes up 35 to 40 percent of an EV's total cost. Lower battery cost would lead to reduced prices of the vehicle and a further stimulus to the EV industry.

The FM also announced the plan to set up a Critical Mineral Mission for domestic production, recycling of critical minerals, and overseas acquisition of critical mineral assets. "Its mandate will include technology development, skilled workforce, extended producer responsibility framework, and a suitable financing mechanism," said FM.

Industry stakeholders are of the view that the announcement of the this mission by the Finance Minister will enable the country to be self-sufficient in critical minerals.

"These measures will significantly boost the processing and recycling industries, enabling India to become the recycling and critical minerals hub in the world," said Nitin Gupta, Co-Founder & CEO of Attero.