In a boost for renewable energy, Budget slashes duties for battery, solar sectors

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Finance Minister Nirmala Sitharaman in her Budget 2026 lent a helping hand to India’s clean energy ambitions, announcing customs duty exemptions to promote domestic manufacturing.

Capital goods used in lithium-ion cells for batteries and battery energy storage systems (BESS) will now be exempt from basic customs duty (BCD), along with imports of sodium antimonate for solar glass production.

The basic customs duty (BCD) on sodium antimonite, a clarifying and fining agent for solar glass, was 7.5 percent, while capital goods were subject to the applicable rates.

"These measures will significantly lower capital costs for domestic battery production, making ‘Make in India’ energy storage solutions globally competitive," said Anurag Choudhary, CMD and CEO, Himadri Speciality Chemical Limited.

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India has set an target of meeting 50 percent of its primary energy needs through renewable energy by 2030. This transition would significantly increase India's need for advanced chemistry batteries, particularly lithium-ion (Li-ion) batteries, due to the limitations of traditional batteries like lead-acid and nickel-metal hydride batteries.

In FY24, India needed ~15 GWh of Li-ion battery storage, largely for EVs and consumer electronics. The demand is expected to reach around 54 GWh by FY27 and around 127 GWh by FY30.

The Budget also removes the duty on capital goods required for processing critical minerals.

"The decision to provide basic customs duty exemption on capital goods required for processing of critical minerals in India, and to extend tax deductibility for expenditure on prospecting and exploration by including additional critical minerals, directly improves project economics and lowers entry barriers for serious explorers," said Hanuma Prasad Modali, Managing Director & CEO, Deccan Gold Mines Ltd.