Customs Duty Exemption on Lithium & other rare minerals to Boost EV Sector Growth in India

 

The proposed exemption in customs duty on import of lithium, cobalt and other rare minerals in the Union Budget 2024-25 is likely to lower the battery production cost and help in making electric vehicles more affordable for the buyers.

 Finance Minister Nirmala Sitharaman while presenting the Union Budget for 2024-25 proposed to fully exempt customs duties on 25 critical minerals and reduce Basic Customs Duty (BCD) 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 sectors, she noted. Minerals such as Lithium, copper, cobalt and rare earth elements are critical for sectors like nuclear energy, renewable energy, space, defense, telecommunications, and high-tech electronics, Sitharaman stated.

Exemption of customs duty on import of lithium, cobalt and other rare minerals and extension of concessional customs duty on Li-Ion cells till March 2026 and withdrawal of equalization levy of 2 per cent on e-transactions is expected to propel the growth of the Indian auto industry. .

The move is likely to encourage few players to indigenise battery production in India.The industry was not expecting a lot but was definitely looking for some announcements with respect to FAME III subsidies, and other direct benefits for BEV/ NEV (New Electric Vehicle). One  have to wait to see if there are any further relaxations in the future by the FM or by the GST Council.

The strategic move will significantly impact India's EV market by lowering production costs and enhancing competitiveness.