Union Finance Minister Nirmala Sitharaman announced in her 2023-24 budget speech that “to further provide impetus to green mobility, customs duty exemption is being extended to import of capital goods and machinery required for the manufacture of lithium-ion cells for batteries used in electric vehicles.”
Lithium-ion batteries are currently the dominant battery technology for electronic vehicles in India, which are currently being imported. The annual EV sales crossed the 1-million mark for the first time in 2022, amounting to 10,75,859 units, according to JMK research, an international advisory and consultant firm across the energy sector, illustrating the growing demand for batteries, which are primarily sourced from China.
Vibhuti Garg, South Asia director of the Institute for Energy Economics and Financial Analysis told Down to Earth, that waiving customs duty to ease manufacturing of lithium-ion cells for batteries, though a welcome move, is only limited to green mobility. It also needs to apply to battery energy storage systems at the grid-scale too.
Sitharaman also said in her budget speech on February 1, “To steer the economy on the sustainable development path, Battery Energy Storage Systems with a capacity of 4,000-megawatt hours will be supported with Viability Gap Funding. A detailed framework for Pumped Storage Projects will also be formulated.”
Shailesh Vickram Singh, founder of Climate Angels said in a press statement, “the decision to extend custom duty benefits for manufacturing of Li-On cells is a very good step as the increased volume of electronic vehicles will see capacity expansion on the domestic side too, which so far has been more import-driven due to low volumes.”
