India’s move to exempt import duties on 35 capital goods for electric vehicle (EV) battery manufacturing and 28 items for mobile phone batteries marks a strategic step toward bolstering domestic manufacturing and clean technology. Proposed by Finance Minister Nirmala Sitharaman in the Union Budget 2025-26 and formalised through the Finance Bill 2025, this signals a crucial policy shift at a pivotal time. The global EV landscape is evolving rapidly.
In March, Chinese EV giant BYD unveiled its “Super E-platform,” promising 500 kilometres of range with just five minutes of charging — a breakthrough that could significantly reduce range anxiety and hasten EV adoption worldwide. Batteries, comprising nearly 40 per cent of an EV’s cost, remain the single biggest hurdle to affordability, especially in emerging markets like India. At present, China dominates global battery manufacturing, producing over 70 per cent of EV batteries.
India, where EVs made up only 2 per cent of passenger car sales in 2024, must urgently address technological and manufacturing gaps. Encouragingly, electric two-wheelers (e2w) have gained traction, with 1.14 million units sold last year, accounting for 60 per cent of total EV sales. While India’s tariff relaxations partly aim to enhance trade ties with the United States, the broader objective should be to decarbonise its transport sector and reduce dependence on oil imports.
To succeed, India must integrate deeply into the global EV battery value chain, spanning mining, refining, manufacturing, and assembly. This would lower costs, enable technology transfer, and position India as a credible alternative to China for supply chain diversification. Sustained investment in R&D, favourable trade policies, and strategic partnerships will be critical. The race for leadership in the EV sector has begun — and India must accelerate to stay in contention. This is the only way forward.
