Govt Drops Import Duty On Key Components For EV Batteries

Giving a further boost to electric vehicle manufacturing in India, the government has removed import duties on several goods and raw materials used in manufacturing EV batteries and mobile phones.

The Centre is taking measures to counter the impact of US President Donald Trump’s reciprocal tariffs, which are set to take effect from April 2.

“We aim to boost domestic production and enhance export competitiveness by reducing duties on raw materials,” said finance minister Nirmala Sitharaman ahead of a vote to pass Finance Bill 2025 in parliament. 

India will exempt import duty on 35 items used to make EV batteries and 28 items used in mobile phone manufacturing, she said.

India and the US are currently engaged in negotiations to address tariff concerns and work towards a bilateral trade agreement.

EV Battery In Focus: The electric mobility sector grabbed a fair share of the spotlight in finance minister Nirmala Sitharaman’s Union Budget 2025-26 presentation last month.

In the budget announcement, Sitharaman proposed a duty exemption for cobalt power, lithium-ion battery scrap, lead, zinc and 12 critical minerals which is expected to give a boost to domestic manufacturing of EV batteries.

She also proposed minimising tariffs on imports of open cells and other components and added 35 capital goods for EV batteries to the exemption list.

To make India a global manufacturing hub, the FM announced a National Manufacturing Mission for MSMEs and large enterprises. Under the mission, the nation’s manufacturing capabilities in the cleantech space, in particular solar cells and the EV ecosystem will get a boost.

India’s  $54.4 Bn EV market is expected to accelerate 2.4 times to reach $132.2 Bn by 2030.

India-US Trade And Tariff Row: The US in Donald Trump’s presidency is looking to levy tariffs on countries that impose high duties on American goods with a focus on “fair trade”. Last month, Trump outlined a new trade policy around fairness and reciprocity, mentioning that the US would charge other countries the same tariffs they impose on American goods. 

As per World Trade Organisation’s (WTO) data, India’s weighted average effective tariff rate on US imports is higher than US tariffs on India. 

Given the scenario, both India and the US in February announced plans to sign a bilateral trade agreement (BTA) in a joint statement. The statement mentioned that Modi and Trump are committed to designate senior representatives to negotiate the first tranche of a mutually beneficial, multi-sector BTA by autumn 2025.

After that, it was reported that India may agree to cut duties across multiple sectors such as gems and jewellery, automobile parts, textiles, chemicals and others as part of the proposed trade deal with the US in return for US reducing duties on certain products.

Reuters reported earlier yesterday that the government was open to cutting tariffs on more than half of US imports worth $23 Bn in the first phase of a trade deal that the two nations are negotiating, citing two government sources.

Last week, a parliamentary committee recommended that the government cut tariffs on the import of raw materials to support local manufacturers.