India's Strategic Shift in EV and Mobile Battery Manufacturing
India has taken a significant step toward enhancing domestic manufacturing and promoting clean technology by exempting import duties on specific capital goods used in electric vehicle (EV) and mobile phone battery production. This move was proposed by Finance Minister Nirmala Sitharaman in the Union Budget 2025-26 and formalized through the Finance Bill 2025.
Key Developments and Innovations
- Exemption of Import Duties:
- Applies to 35 capital goods for EV battery manufacturing.
- Covers 28 items for mobile phone battery production.
- Global Competition:
- Chinese EV giant BYD's "Super E-platform" offers a 500-km range with just five minutes of charging.
- This innovation challenges traditional vehicles and could accelerate global EV adoption.
Challenges and Opportunities
- Cost of Batteries:
- Batteries account for 40% of an EV's cost, hindering adoption in lower-income countries.
- Global Dominance:
- China produces over 70% of EV batteries globally.
- Lithium-iron-phosphate (LFP) batteries are the industry standard due to cost efficiency and performance.
- Market Penetration:
- In 2024, EVs represented 45% of car registrations in China but only 2% in India.
- Electric two-wheelers (e2w) in India saw significant growth, with 1.14 million units sold in 2024, making up 60% of total EV sales.
Strategic Objectives
- Decarbonisation of Transport:
- India aims to decarbonise its transport sector through technology transfer and integration into the global battery value chain.
- Global Trade and Relations:
- Duty exemptions also aim to strengthen trade ties with the United States and avoid reciprocal tariffs.
Future Prospects
India's success in the EV space will hinge on leveraging favorable trade policies, investing in research and development, and establishing a strong presence in the global battery ecosystem as a reliable alternative to China.
