Auto industry welcomes exemption of import duty on lithium, cobalt

The reduction in customs duty to nil on critical minerals such as lithium, copper, cobalt, nickel etc. will encourage cell manufacturing in the country and add to the evolving EV ecosystem in the country, according to the Automotive Component Manufacturers Association of India (ACMA).

The Society of Indian Automobile Manufacturers (SIAM) also welcomed exemption of customs duty on imports of lithium, cobalt and other rare minerals and the extension of concessional customs duty on Li-ion cells till March 2026.

The finance minister proposed to fully exempt customs duties on 25 critical minerals and reduce duty 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,” says the finance minister. Minerals such as lithium, copper, cobalt and rare earth elements are critical for sectors like nuclear energy, renewable energy, space, defence, telecommunications, and high-tech electronics.

“We expect domestic EV and BESS deployments will drive multifold battery demand by 2030. Regulatory support such as the proposed customs duty exemption is a critical enabler, as India largely relies on imports for access to critical battery raw materials,” says Mahadevan Seetharaman, partner at Bain & Company.

BatX Energies Pvt Ltd, a battery recycling company which extracts critical earth metals such as lithium, cobalt, nickel and manganese to create new batteries for the EV industry, applauded the move to reduce customs duty on critical minerals.

"BatX Energies applauds the recent budget announcement by the Indian government, which marks a significant stride towards a greener future. The reduction of Basic Customs Duty (BCD) and exemption of 25 essential minerals from custom charges is set to lower production costs for battery manufacturing and recycling, enhancing the affordability and accessibility of electric vehicles (EVs) in India. The strategic move will significantly impact India's EV market by lowering production costs, enhancing competitiveness, supporting domestic manufacturing, encouraging innovation, improving supply chain resilience, and promoting environmental sustainability,” says Utkarsh Singh, co-founder and CEO of BatX Energies.

“The budget aims to support the ambitious goal of achieving 30% electrification of the vehicle fleet by 2030, bolstered by initiatives like the Production Linked Incentive (PLI) scheme for urban mining in future, expected to expand recycling capacity to process 295,000 metric tons of dead batteries annually, generating significant employment and forex savings estimated at ₹31,835 crore by 2030,” says Singh.

Custom duty exemption for critical minerals for supporting Lithium ion battery manufacturing as well as associated supply chain is a great move in the direction towards making India the global hub for critical minerals, says Dr Rahul Walawalkar, President of India Energy Storage Alliance (IESA) and President and Managing Director of Customized Energy Solutions India Pvt. Ltd.