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.

Lithium finding in India , EV industry Charged Up..

As India gears up to boost electric vehicle (EV) adoption, the massive find of lithium reserves in the country has built up  excitement , hope of self-Reliance & brightened up the prospects for the country in the field of EV battery cell manufacturing. 

According to the Council on Energy, Environment and Water (CEEW), the country will require USD 4.5Billion of investment to meet its domestic lithium-ion battery manufacturing target of setting up 50 GWh of lithium-ion cell and battery manufacturing plants. India's lithium cell production is projected to be 900 GWh by 2030.  

 "The 5.9 million tonnes of lithium reserves found in J&K, If completely extracted and converted into battery-grade Lithium  salts can support up to  great extent   though  the   details about quality, nature etc are yet to be fully established.

Lithium is  the lightest  metal & lightest  solid element . Being highly reactive   not found in its elemental form.  Mostly found in concentration with other materials in the form of oxides and carbonates. Extracting & converting the raw lithium to battery-grade lithium calls for a series of refining processes some of  technology are not available  in India. Very few Global companies  have  such expertise  and being doing this for decades.  

Though the EV penetration in India  till 2020  was very small , the EV penetration in India is slowly but steadily increasing, especially in the e-scooter segment. Now, the four-wheeler manufacturers have also joined the bandwagon,  specially Tata Motors  , M&M pushing India's aim to significantly cut the dependency on traditional fuels and internal combustion engine-driven vehicles by 2030.  

The slogan EV30@30  which means ,  the government expects the EV sales penetration to be 30 per cent by 2030. for private automobiles. 70 per cent for commercial vehicles, and 80 per cent for two and three-wheelers, which would not only reduce the country's oil import bills in the longer term, but also ensure a cleaner environment.  

The discovery of Lithium is vital as it comes at a time when India is going all out for a green transition in transportation,, where electric vehicle adoption has become a national priority..

India slashes corporate tax to fire up economy, Dalal street responds with a massive surge.

Diwali came early for India Inc and the bourses after the Centre slashed effective corporate tax to 25.17 per cent. Indian  Finance Minister says the new rates would be "comparable with the lowest tax rates in South Asian region and in South East Asia". The announcement sent shares soaring more than five percent in Mumbai -- the biggest jump in 10 years .

Here's what India FM announced on Friday,  20^th Sept :

• Domestic company to pay income tax at the rate of 22% subject to condition they will not avail any incentive or exemptions. 

• Manufacturing companies set up after October 1 to get option to pay 15% tax. Effective tax rate for new manufacturing firms to be 17.01% inclusive of surcharge & tax.

• Listed companies that have announced buyback before July 5, 2019, tax on buyback of shares will not be charged.

• Higher surcharge will also not apply on capital gains on sale of security including derivatives held by FPIs.

• Enhanced surcharge will not apply to capital gains arising on equity sale or equity-oriented funds liable to STT stabilise flow of funds into capital markets.

• To provide relief to companies availing of concessions and benefits, a MAT relief by reducing it from 18% to 15%.

• CSR 2% spending to include government, PSU incubators and public funded universities, IITs, National  Labs & autonomous  bodies engaged in  research in science, technology, engineering & medicines. 

The following graphics from Eco times of India  sums it all.