The proposed exemption of customs duty on the import of lithium, cobalt, and other rare minerals in the Union Budget 2024-25 is expected to reduce battery production costs, making electric vehicles (EVs) more affordable, according to auto industry leaders. Finance Minister Nirmala Sitharaman announced the full exemption of customs duties on 25 critical minerals and a reduction in Basic Customs Duty (BCD) on two of them.
"This will significantly boost the processing and refining of such minerals and ensure their availability for strategic sectors," said Sitharaman. Minerals like lithium, copper, cobalt, and rare earth elements are vital for sectors including nuclear energy, renewable energy, space, defence, telecommunications, and high-tech electronics.
Vinod Aggarwal, President, Society of Indian Automobile Manufacturers (SIAM), praised the exemption and the extension of concessional customs duty on Li-Ion cells until March 2026. He also welcomed the removal of the 2% equalisation levy on e-transactions, expecting these measures to drive growth in the Indian auto industry.
"The Indian automobile industry appreciates the emphasis on economic growth, especially the significant fiscal support for infrastructure over the next five years," Aggarwal said. He also highlighted the liberal allocation of Rs 2.66 trillion for rural development and infrastructure as a positive step for the rural economy.
Shradha Suri Marwah, President, Auto Component Manufacturers Association (ACMA), stated that reducing customs duty on critical minerals would encourage cell manufacturing in India and contribute to the evolving EV ecosystem. Rajat Mahajan, Partner, Deloitte India believes the move will encourage players to localise battery production in India. However, he noted the budget's lack of direct benefits for the automotive sector, particularly regarding FAME III subsidies and other EV-related incentives. Utkarsh Singh, Co-Founder & CEO, BatX Energies, emphasised that reducing BCD and exempting 25 essential minerals from custom charges would lower production costs for battery manufacturing and recycling, making EVs more affordable and accessible in India. Hero MotoCorp, Executive Chairman, Pawan Munjal remarked that the budget positions India as a technology-driven and knowledge-driven economy, committed to sustainable development. Ashok Leyland Executive Chairman Dheeraj Hinduja and Mercedes-Benz India MD & CEO Santosh Iyer also echoed the sentiment, noting the budget's focus on promoting sustainable mobility and building a robust foundation for a developed Indian economy. Sudarshan Venu, MD, TVS Motor Company highlighted the government's priority on infrastructure rollout, which will have a multiplier effect on the economy. Mahesh Babu, CEO, SWITCH Mobility, mentioned that while the budget does not include a direct EV scheme like FAME III, it provides crucial support for the EV ecosystem.
Mahadevan Seetharaman, Partner, Bain & Company, stressed the importance of regulatory support like the proposed customs duty exemption, given India's reliance on imports for critical battery raw materials. He expects domestic EV and BESS deployments to drive significant battery demand by 2030. Yatin Gupte, Chairman & Managing Director, Wardwizard Innovations & Mobility, pointed out that strong fiscal support for infrastructure projects is a significant boost for the automotive sector. Chakravarthi C, Managing Director of Quantum Energy, added that the budget addresses the need for capital and skill development in the EV sector. Pratik Kamdar, CEO & Co-Founder, Neuron Energy, stated that the exemption would substantially lower production costs for battery cells, making EVs more economically viable for consumers. Uday Narang, Founder and Chairman, Omega Seiki Pvt Ltd, praised the budget's focus on women-led development and substantial allocation for schemes benefiting women and girls, fostering inclusivity and empowerment in the industry. (Source: ET)
