Centre weighs extending 5% concessional duty on lithium-ion cells as local manufacturing struggles

NEW DELHI: The Centre is considering extending the 5% concessional basic customs duty (BCD) on lithium-ion cells used in battery packs for electric vehicles (EVs) for another two years in the upcoming Union budget, according to two people familiar with the matter, as domestic manufacturing has failed to gain momentum.“The proposal from the country’s automobile industry came up during consultations with the ministry of finance,” said one of the two people cited above.“The recommendation is being considered by the Union ministry of finance,” said the second person. Both persons quoted earlier did not want to be identified.The battery accounts for up to half of an EV’s price, and India’s lithium-ion cell imports have surged to $3 billion in FY25 from $1.8 billion in FY22, according to data from the commerce ministry's trade portal.India currently only assembles imported batteries, and demand for these cells is expected to quadruple from the existing 15 gigawatt-hours (GWh) to 60-65 GWh by FY30.

Domestic battery manufacturing plans haven’t gone as planned, with no disbursals under the ₹18,100-crore production-linked incentive (PLI) scheme for advanced chemistry cells (ACC) since launch in 2021."The extension of the concessional duty on cells would be supportive for the growth of battery adoption, given that the domestic manufacturing industry is in its early days and currently companies majorly assemble batteries in the country after importing the cells,” said Debmalya Sen, president of industry lobby India Energy Storage Alliance (IESA). “The local battery manufacturing facilities are expected to come up to commercial scale by the end of this decade.